EMPLOYMENT

The House paid special attention to unemployment when it debated the economic situation only three weeks ago. We are right to return to the subject today. No one on this side of the House can regard the present rate of unemployment as remotely tolerable or feel satisfied if the Government are leaving undone anything which they can reasonably do to bring the rate of unemployment down.

People of my age, on both sides of the House, were first propelled into politics during, and perhaps by, the world slump of the 1930s when the rate of unemployment in Britain never fell below 10 per cent., and on occasion topped 20 per cent. In November this year the level of unemployment in the United Kingdom on the November count reached 1,125,000 on the adjusted basis—a rate of 4.8 per cent. But in the North and in Wales the rate is a third as much again, and in Northern Ireland it has reached 8.8 per cent. Within these regions there are some towns or areas where it is higher still. In fact the level of unemployment is worse today than it has been for more than a generation.

It is small comfort that, even so, it is still only half as bad as it was in the thirties, or that now, as then, the root cause is a world recession, which has brought even higher levels of unemployment to many other countries. In the three months to September unemployment in West Germany was 93 per cent. higher than a year earlier, and in France 85 per cent. compared with 62 per cent. higher in the United Kingdom.

The fact that the recession hit us later and less hard than many of our neighbours owes much to the action which I took to increase demand in July and November last year. But unemployment in Britain has been made worse than it need have been because our inflation rate has been over twice the international average. Rising prices have aggravated the recession, undermining company finances, binding the hands four exporters, and
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weakening investment. Worse still, our inflation rate, as I warned it would, has prevented me this year from countering the recession by a further stimulus to demand.

Since July, our fight against inflation has produced encouraging results. Last week's figures show that prices have risen during the six months to November at an annual rate of 14.9 per cent.—the smallest rise during any six-month period since October 1974. This compares with levels of up to 36 per cent. in the early summer. I can now be certain of meeting my Budget forecast that prices in the second half of this year will be rising at between 12 and 16 per cent. a year; and, subject always to unforeseen increases in our import prices, we should by the end of next year have the 12-month rise in prices down to single figures.

So there is real progress to report and more to expect. Nevertheless, our inflation rate is still well above that of our competitors and it may well remain higher right through next year. In present conditions, therefore, there is no scope for seeking to reduce the level of unemployment by a general reflation of domestic demand which is financed from the public purse.

Besides the constraints imposed by our rate of inflation, the balance-of-payments constraint also remains a real one, although here, too, there is progress to report. It looks as though our current deficit this year will be only half that of 1974. But the increase in output we expect next year is bound to increase our imports and the terms of trade are more likely to move against us than in our favour. So we shall be hard put to continue improving our balance of payments at the same rate as this year.

There is another constraint. The size of the public sector borrowing requirement is already as high as we can expect to finance without either printing money, as did the previous Government—[HON. MEMBERS: "Oh."]—Oh, yes—or raising interest rates and so choking off private investment and local authority house building.

I believe that these three constraints are now well understood. Indeed, I was heartened by the fact that those members of the TUC General Council whom I met
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last week confirmed the view of the Trades Union Congress last September that there is no scope for a general demand reflation by Government action in current circumstances.

There are, however, many signs that the recession is bottoming out in Britain, as in other countries. Yesterday's index of industrial production adds colour to this view. But there is bound to be a lag of some months before an improvement in output is reflected in an improvement in employment. Meanwhile, we must look for the reflation of demand in Britain mainly to the stimulus of higher exports and investment. This means, above all, that our counter-inflation policies must be seen to work not only in the current wage round, but thereafter. Unless we can steadily reduce our rate of inflation, we shall not get the exports or investment that we need.

Success in the battle against inflation is the precondition of success in the battle against unemployment. Support for the Government's counter-inflation policy is not a concession made by the trade union movement to a Government of whose other objectives it happens to approve. It is the most fundamental interest of the trade unions themselves.

There is a second condition for our success in bringing down unemployment. As I think is now very widely recognised in all parties and all sections of our community, the key to improving our economic performance lies in the regeneration of our manufacturing industry. Eighty per cent. of our exports are manufactured goods. If our export drive falters in the face of world recovery, the prospects of employment will falter with it.

The House must face the disturbing fact that at present in several sectors of our manufacturing industry the problem is not deficient demand—there is demand to spare both at home and abroad. It is the failure of these sectors, above all, our motor car industry, to meet the demand which is already there. The British Leyland Motor Corporation lost 40,000 cars in the last six months through industrial disputes. For some popular British models there is now a two-months' waiting list. We cannot hope to get unemployment down so long as existing demand is unfulfilled through industrial disputes.

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In the longer run, the prospects for employment depend critically on increasing our rate of investment. But it is no good expecting businessmen to invest if the return in productivity per unit of investment is far below that of our competitors abroad because of inefficient management or restrictive labour practices. Let me quote again some disturbing figures which by now should be familiar to the House. For each worker in industry British firms have been investing only two-thirds as much as German firms and only one-third as much as French firms. But a study in the West Midlands has shown that, on average, machines in the factories investigated stand idle for half the day, production workers spend only about half their time actually operating machines, and only one-fifth of the time it takes to process a product is actually spent in production.

We can return to full employment and maintain full employment over the years to come only if we can bring down our inflation rate to international levels and improve our industrial performance. Both of these are tasks in which the main responsibility will fall on ordinary men and women on both sides of industry, operating at the level of the individual plant. But the Government must accept the responsibility to create the conditions in which industry can thrive.

In the meantime, the Government have the inescapable responsibility for taking every possible action in every field which may help to protect employment and to deal with the worst consequences of the recession without setting at risk our prospects of a return to full employment as soon as possible. This Government accept that responsibility, too. Last September we took a series of such measures and I showed in our last debate how they were succeeding. I shall now describe a number of further decisions in this field.

First, we have taken a number of decisions which will have a rapid effect in increasing the number of people in work, at a very low cost to the Exchequer. Like similar measures which we announced on 24th September, they have the advantage over conventional demand reflation that they act much more quickly, they cost far less, and they can be withdrawn quickly and
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easily when employment begins to rise again and they are no longer necessary. Since the September measures have already proved their value, we have decided to take further measures of this type.

In September we allocated £30 million to the Manpower Services Commission for a scheme to create useful short-term jobs for young people and others in areas of high unemployment. We expected that at its peak this scheme would provide the equivalent of 15,000 jobs lasting 12 months. The scheme has got off to a very fast start. Within a matter of two weeks after the first applications had been received, the first jobs were in operation. The Manpower Services Commission and its special job creation unit deserve our congratulations for this.

The response to the job creation programme has exceeded all expectations. Over 1,000 applications were received in the first two months requesting a total grant of over £16 million. So far 276 projects have been approved, providing over 4,000 jobs. The job creation programme gives priority to young people, since as a group they suffer disproportionately in a recession and can be demoralised for life by being out of work for a long period after leaving school.

I know that the job creation programme has been criticised for creating only temporary jobs. The programme is no substitute for economic recovery. It is designed simply to blunt the effects of the recession on those groups who suffer most in such times. The job creation programme is also criticised for the types of project it is supporting. Some of the work is unskilled and the training element may be limited. But if the job creation programme is to provide a range of opportunities for all types of ability, an element of unskilled work is inevitable. At first, most of the proposals coming forward were for unskilled work, but now more imaginative projects, which have been longer in preparation, are being received.

I can give the House some examples. In Barrow there is a scheme for revitalising a vandalised factory so that it may become a training centre. In Sunderland people are working on house renovation for the homeless and in Allerdale people are preparing a rugby pitch so that the
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existing pitch may be used for a new factory. I think the House would regard such schemes as being of real value to the community as a whole, as well as to those who are saved from the demoralisation of unemployment by them.

Some of the criticism I have read is quite misplaced. For example, there has been criticism of a recycling scheme. This is an Oxfam-inspired scheme which had been run before. Pre-sorted recycle-able material is used and I understand that a profit of £2,000 per week is being made. The jobs are likely to become permanent.

As this is an expensive scheme, which now looks as though it is to be increased, and as the right hon. Gentleman has admitted that these jobs are temporary and not related to future employment prospects or the creation of new skills, should not some of the money at least be put into the further education sector so that people can be trained full time and be ready for the economic upturn?

We are putting a lot of money into that sector. I shall be explaining in a moment what we are doing about training.—[Interruption.] The particular problem the hon. Gentleman has in mind—[Interruption.]

As some projects may last rather less than 12 months, there is a risk that if the present rate of response continues, the scheme could pass its peak too quickly. The Manpower Services Commission believes that there are opportunities to extend the scheme rather more widely outside the development areas. We have, therefore, decided to increase the allocation by one-third, that is, by another £10 million. We shall be keeping the scheme under review.

On the basis of the original pattern of applications, many of the jobs would last less than 12 months. The original allocation for the scheme would have assisted over 25,000 people. If the same pattern continues, the increased allocation will help about 35,000 people, mostly young people. We also hope that many of these people will be able to go on, with help from the job creation unit
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and its local action committees—and this answers the point raised by the hon. Member for Ripon (Dr. Hampson)—to a course of training or a permanent job.

Is my right hon. Friend aware that, although I support the idea of job creation schemes—which he has said would break the back of the school leavers' problems by Christmas—25 per cent. of all school leavers on Merseyside are still unemployed? This is a terribly serious problem. Does he realise that although these school leavers may be in work for short periods as a result of job creation schemes, they become unemployed later? Will not my right hon. Friend agree that this is not the way to deal with this problem?

Order. Before the right hon. Gentleman answers his hon. Friend, I must appeal to the House. The hon. Member for Liverpool, Walton (Mr. Heffer) is seeking to catch my eye later in the debate. It is quite unfair to make interventions which are really arguments. I have the names of 50 right hon. and hon. Members who want to speak in this debate.

My hon. Friend is quite right. In his part of the country there is a serious and exceptionally grave problem which this scheme by itself is not capable of removing—although I believe my hon. Friend agrees that it assists. There are a number of other measures we are taking to which I shall now turn. If I could reinforce your plea, Mr. Speaker, it might be wiser if hon. Members were prepared to listen to all the measures I have to put to them and then, by all means, ask questions and put points of view in the debate. My right hon. Friend the Secretary of State for Employment will deal with any points I have not covered when he replies to the debate.

The temporary employment subsidy was introduced on 18th August in assisted areas and extended on 24th September to the whole of Great Britain. It provides a payment of £10 per week per worker for three months, renewable for a further three months, to employers who are prepared to suspend redundancies which would otherwise have taken place. This scheme, like job creation, has had a
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quick response. It has already maintained over 9,000 jobs.

The present rules limit the subsidy to redundancies of 50 or more. We have decided to extend the scheme for the benefit of smaller firms and firms declaring smaller redundancies by extending it to redundancies of 25 or more. We estimate that this will raise the gross cost from £16 million to £19 million and the number of workers covered from 60,000 to 70,000.

My right hon. Friend the Secretary of State for Employment announced in July an extension of the community industry scheme from 2,000 to 3,000 places. This is a scheme designed to assist young people, especially the socially disadvantaged who find it hard to get or hold down a job. The extra 1,000 places have now been allocated and there is a demand for extra places and wider coverage.

We do not regard community industry essentially as a counter-cyclical scheme simply intended to provide work for unemployed young people. But clearly, in periods of recession, there is a case for expanding it temporarily. The Government have therefore decided to increase the number of places under the scheme by a further 1,000 until the end of the next financial year, when the scheme will taper back down to 3,000 places. The estimated extra cost will be £1.5 million in 1976–77, in addition to the existing provision of some £4 million.

All the schemes I have just mentioned are designed to provide jobs or save jobs in the immediate future—before the expected revival of our output and the recovery of world trade have been able to affect employment in Britain. We must also take steps to ensure that we have an adequate supply of trained men and women to meet the demand when recovery is in full swing.

In the Budget I allocated £50 million extra to the Manpower Services Commission, particularly for extra training and placement facilities. In July we provided £10 million more for training, community industry and the careers service. In August we introduced the temporary employment subsidy—£8 million—and in September we extended it by another £8 million. We introduced the recruitment subsidy for school leavers at a cost of £5
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million, while job creation was introduced at a cost of £30 million. This will have been of some help in the constituency of my hon. Friend the Member for Liverpool, Walton (Mr. Heffer). We have provided another £25 million for training and mobility. This further instalment brings the total sum granted this year over and above the already expanding provision in the labour market programme to more than £150 million.

The Training Service Agency is expected to spend some £190 million on industrial training this year. Allowing for changes in the method of financing industrial training boards, this is a real increase of some 55 per cent. over expenditure in 1973–74. Numbers in training have increased by about 50 per cent. during this time. But we still have a long way to go before our training programme can compare with those in some other countries, particularly Sweden.

As I told the House in the debate on the Address, the Government are determined to organise a substantial further expansion of training facilities and to introduce further measures to assist the mobility of workers in time for the upturn. We shall be considering proposals for this purpose from the Manpower Services Commission early in the New Year.

The additional measures I have just announced, taken together, could help as many as 20,000 more people in particularly vulnerable sections of the labour force—the young, the socially deprived and those facing large-scale redundancies. The gross cost will be £15 million but, as I have pointed out before, the net cost to the Exchequer is much less in present circumstances than the gross cost because of the saving on social security payments and the gain in taxation. It may well be close to zero. Furthermore, in the case of community industry, as in the case of training, a large part of the cost comes back to us through a successful claim we have made to the EEC Social Fund. Corresponding measures will be introduced in Northern Ireland.

At the moment the Manpower Services Commission is not in a
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position to put forward concrete proposals for further expenditure in this field, but we expect to receive proposals early in the New Year and to act upon them as soon as we receive them.

I now turn to the question of import controls. The Government have made it clear that they are prepared to consider imposing temporary controls on our imports in cases where sectors of industry, which would be perfectly viable in normal times, were threatened with extinction by excessive imports during the recession. We also asserted that such selective import controls should not be introduced where this was likely to provoke retaliation against British exports or to start an international trade war from which the poorest countries would suffer most.

These reservations were unanimously supported by the Labour Party conference last October—and with good reason. No country would suffer more than Britain from an international trade war, since we depend more on world trade than any of our competitors. That is why we cannot accept the proposal made in some quarters that we should seek to solve our problems through imposing import controls for a long period over a whole range of manufactured consumer goods.

We must recognise that the recession which affects so much of British industry is not peculiar to the United Kingdom, It affects all major western industrialised countries. All of them are suffering from under-employment and the under-utilisation of their industrial capacity. In these circumstances, action of a general nature by the United Kingdom would risk retaliation against our exports and in the process we could finish by dragging the country down into the sort of prolonged depression which it experienced in the 1930s.

It is for this reason that we have agreed with our major trading partners in the OECD pledge, at the Rambouillet meeting, and on other occasions, that we should seek rather to work our way out of the present recession through a co-ordinated programme of expansion. Inevitably, it must be the countries with a relatively strong balance of payments and new inflation rate who have to take the first steps. They have a strong interest in doing so, since if they fail to act as
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necessary, countries with an adverse balance of payments will have to bring their foreign account into balance by restricting their imports, either through deflation, or by other means—either would be equally damaging to world trade. We agreed at Rambouillet that world recovery was now under way, although vigilance and adaptability will be required to prevent the recovery from faltering. I believe that the major industrial countries are now fully aware that, besides their national objectives, they have international responsibilities to which their policies must be adjusted.

It is against this background that we have decided to introduce some temporary further restraints on our imports in a limited number of areas. Other countries have taken similar action. Perhaps the most obvious problem area for Britain is textiles and clothing. Where imports from low cost sources have posed a major problem for our industries, a wide range of imports from these sources were already subject to restrictions at the beginning of this year. In the past few months the European Community has negotiated new arrangements and taken emergency action pending new agreements under the GATT Multi-Fibre Arrangement which has considerably extended the range of these restrictions.

By virtue of an agreement inside the Community for sharing the import burden, the future growth of the Community's textile imports is distributed so as to ensure that those member States which have taken most of the Community's imports in the past will take least of their growth in the future. This arrangement is particularly helpful to the United Kingdom since we have traditionally had a relatively liberal import regime.

The effect of the Community formula is that in many cases where the Community is accepting an annual growth of imports of 6 per cent. or higher, the United Kingdom share is a minimum of only Iper cent. For example, the overall rate of growth in the recently negotiated agreement with Hong Kong is 7 per cent. for the Community as a whole, but 2 per cent. in the United Kingdom, with growth rates of only ½per cent. for the most sensitive items.

So far the Community has reached restraint agreements with Hong Kong, South
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Korea, Pakistan, India, Singapore, Malaysia and Macao, and Japan. Corresponding unilateral restrictions have been imposed on Taiwan, which is not a party to the MFA. Further agreements are still to be negotiated with Poland, Hungary, Rumania and a number of relatively minor suppliers in the developing world.

Where necessary the United Kingdom and other member States have through the Commission imposed emergency restrictions on imports where this can be justified under Article 3 of the MFA. In the case of the United Kingdom, such restrictions were imposed on various items of textiles and clothing from South Korea while negotiations with that country continued for a restraint agreement.

As a result, virtually all imports of textiles and clothing from low cost sources are now subject to control. In particular, whereas before this action only a small range of clothing was subject to restriction, now nearly all varieties of clothing from significant low cost sources are controlled.

I am well aware—and many hon. Members have put this point in recent months—that in certain areas there have been delays in concluding negotiations and as a result imports have markedly increased. But as the quotas are being established, the level of imports will be cut back. In some cases, where imports this year substantially exceeded the quotas we have now established—this applies to knitwear, trousers, women's skirts and blouses and some man-made fibre fabrics—no further imports have been licensed, and nor will they be licensed at all for the rest of this year, or during the whole of 1976. That means there will be very substantial reductions in imports in the coming year.

In many cases there will be no imports at all of those particular items where the imports in the current year have already exceeded the potential quantity, but it depends on the particular source and the particular item.

I am coming to that, if my hon. Friend will allow me to proceed.
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I have more to say about textiles first.

Action of this kind under the Multi-Fibre Arrangement is still continuing. In the last few weeks, a new agreement has been reached with Korea which will result in new controls on imports from that country, and in the last few days an agreement has been reached with Japan. In the coming weeks the Community is embarking on negotiations with Latin America and subsequently with Eastern European suppliers.

The House will see that the United Kingdom textile industry stands to gain major benefits from the Multi-Fibre Arrangement. I believe these benefits in the main outweigh the limitations which it imposes on our freedom to cut back imports more drastically.

But there are some areas where we believe that further special measures, compatible with our international obligations, are needed to control imports of certain textile and clothing products. We are, first, taking steps to add to our existing restrictions on cotton yarn by placing quotas on cotton yarn from Spain. Spanish cotton yarn has hitherto been a small industry, and its exports to the United Kingdom were not restricted. But in recent years exports have risen sharply and have added considerably to the difficulties facing our yarn industry.

We are also anxious about certain textile imports from Portugal. The Community will soon start negotiations with Portugal aimed at agreement to restrict exports of a range of products to EEC markets, and in particular the United Kingdom market. I cannot forecast what the outcome of the negotiations will be. [Interruption.] If my hon. Friend the Member for Bolsover (Mr. Skinner) would keep his trap shut, the whole House would be grateful.

Further to that point of order, Mr. Speaker. I am getting more than a little concerned about the use of language in the House. No doubt you
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will have noticed yesterday that the Secretary of State for the Environment used the word "codswallop". Now the Chancellor of the Exchequer talks about keeping one's trap shut. I think that you should be doing something about this trend.

As I was saying before I was so agreeably interrupted, I cannot forecast what the outcome of the negotiations will be. I can, however, say that the discussions within the Community on the mandate for the negotiations are proceeding satisfactorily. But there are two areas—cotton yarn and woven manmade fibre fabrics—where we have come to the conclusion that we cannot wait until the negotiations are concluded.

We are therefore taking action in advance by imposing quota restrictions, with effect from midnight tonight. I hope that the Portuguese Government will understand that in taking this action we are not disregarding the coming negotiations. It is just that a situation has arisen in which we could not afford the risk of forestalling involved in delay.

The Government have also examined recent increases in imports of men's woollen suits from Eastern Europe, which our own clothing industry has—rightly—pointed out as a principal area of disruptive growth. We have requested immediate discussions with the main supplying countries with a view to agreeing levels of restraint on their exports to us of these products. I am confident that these negotiations will succeed.

We have also considered imports of leather footwear from Poland, Czechoslovakia and Romania. These countries have already undertaken, as my hon. Friend the Under-Secretary of State for Industry announced in May, to restrict their 1975 exports of men's leather footwear, excluding sandals, to a level between 5 and 10 per cent. below that on comparable exports in 1974. My right hon. Friend the Secretary of State for Trade is requesting these countries to continue this restraint on their exports throughout 1976 and to extend a similar voluntary
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restraint on women's and children's leather footwear also.

I believe that these relatively limited measures will help sectors of the textile, clothing and footwear industries in the short term. The long-term future of the clothing industry is now better assured by the re-organisation scheme already announced by my right hon. Friend the Secretary of State for Industry.

The Government have given very careful consideration to whether restrictions on imports of colour television tubes were necessary to assist the manufacturers in the United Kingdom. Problems caused by the low prices of imported tubes should be substantially eased by the considerable increase in prices now being made by the main foreign suppliers of the most popular sized tube, but the key problem in this sector is that British industry has a capacity to make nearly 3 million tubes per annum, but has a domestic market of less than half that volume.

Imports have fallen from 1.5 million in 1973 to 1.3 million in 1974 and to some 900,000 in 1975. Most of the imported tubes are, however, of sizes and types not made in the United Kingdom. We could not introduce controls on these without causing serious harm to the United Kingdom manufacturers of colour television sets. Controls on tubes that are similar to those made in Britain would not make a sufficient impact on loading to improve the position of British manufacturers.

Nevertheless, my right hon. Friend the Secretary of State for Trade will be introducing surveillance licensing for imports of colour television tubes from all sources. In addition, surveillance licensing will apply to imports of colour and portable monochrome television sets. These measures will enable us to keep a close and detailed watch on import trends in case further action is required.

The Government have also considered whether to introduce import restrictions on foreign cars. This, however, is an area where the probability of retaliation is very substantial and where immense damage would be done to the British car industry if retaliation occurred. This is, of course, the reason why the Society of Motor Manufacturers and Traders has publicly announced its strong opposition to import controls. I must, moreover, remind the House that the demand for
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some British cars at present far exceeds their output, and control of imports could well be met in the short run by a diversion of exports to the home market rather than by an increase in output. The expansion of our exports is, of course, as important as effective competition against imports.

The Government recognise their responsibility to do all they can to help British exporters. My right hon. Friend will be announcing tomorrow some new measures which are being taken for this purpose and which will thereby help to increase employment further.

Positive action is also needed in other areas to ensure that manufacturing industry can weather the present recession and compete more effectively when world demand revives. Accordingly, I have decided to make a number of changes to the hire-purchase and hiring terms controls which have been in force since December 1973. Some of these controls are holding back demand at a time when the industries concerned have ample spare capacity. The relaxations which I am proposing will provide a useful stimulus over the next few months with no cost to the taxpayer and no additions to the public sector borrowing requirement.

From tomorrow, controls will no longer apply to carpets and other floor coverings, furniture, kitchen and bathroom fittings, mattresses, space and central heating, prefabricated buildings, caravans and boats. For other industries, with the exception of cars, I have decided to relax the controls rather than to abolish them entirely, because beyond a certain point extra demand would be met not by increased home output but by increased imports. That is what happened when my predecessor made certain relaxations some time ago. Apart from the items I have mentioned, therefore, the minimum down-payment will be reduced from 33⅓ per cent. to 20 per cent. and the maximum repayment time will be increased from 24 months to 30 months. In parallel with this, the minimum advance rental payment for hired television sets and other goods still subject to hiring control will be reduced from 42 weeks to 26 weeks.

Given the difficulty which the United Kingdom car industry would face in meeting
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any rapid increase in demand at this time and the current level of stocks of home-produced cars, the present limits of 33⅓ per cent. deposit and two years to pay will have to remain in force for the time being. I do, however, feel justified in making one small, but socially significant, relaxation to the existing hire-purchase controls on the sale of cars.

The Department of Health and Social Security will begin next year the payment of mobility allowances to the seriously disabled as an alternative to the provision of three-wheeled invalid vehicles, which are already exempt from hire-purchase controls. To allow the disabled to take proper advantage of these new allowances from 1st January, I am exempting from these controls the purchase of cars by those receiving a mobility allowance

When hire-purchase controls were reintroduced in 1973, the banks and finance houses were asked to observe similar restrictions on the terms of their lending to persons for the purchase of items covered by the controls. The Governor of the Bank of England, with my agreement, is therefore now indicating to them that they will be free to match these relaxations in the terms of their lending.

But I must emphasise that the intention of these measures is not to relax the general restraints on credit for persons, but to ease the position of certain selected industries which are important to the economy and which in many cases have excellent export records. The Governor is accordingly asking the banks and finance houses to continue to exercise restraint over the total of their lending to persons.

There is one other area where I believe the Government can be of some help to industry. Because of cash flow problems and falling demand, stocks held in manufacturing have been falling. There is a risk that in some areas these stocks may be too low for prompt action to meet export orders, and exports may therefore be frustrated. There is a further risk that, if the recovery in demand is at all rapid—and it may be—there may be a scramble for stocks, which would put up prices and pull in imports. This depends mainly on the commercial judgment of companies, and I hope they will bear in
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mind the advantage of anticipating any rapid rise in world material prices in the upturn.

The Government are, however, taking certain steps to help. In the public sector the Government have agreed to a British Steel Corporation proposal to build a special counter-cyclical stockpile of steel at a cost of £70 million this financial year, and agreement has now been reached on the terms of Government financing. This stockbuilding should help both the Corporation with its immediate problem of under-utilisation of capacity and the Corporation's customers in the private sector by assuring their supplies when the recovery in demand takes place.

In the private sector the liquidity position of companies is beginning to improve and should be further improved next year, not least because of action taken by the Government last year. This should reduce the pressure on companies to reduce stocks because of cash flow problems. In addition, I understand that at present the banks are generally able and willing to provide additional finance to credit-worthy customers to finance increased working capital, including stocks and work in progress. I wish to make it clear that the banks should not feel inhibited about lending to manufacturing industry for this purpose and the Governor of the Bank of England is therefore restating the qualitative guidance to the banks and finance houses in this sense.

I come finally to the problem of investment, which is both the key to the improvement of our industrial performance over the next few years, and should be a major factor in accelerating recovery next year so as to reduce unemployment. As the House knows, I have already made £200 million available since April for accelerating industrial investment, particularly in the areas where it is most important to the overall performance of our industry. We need to be sure that when the upturn comes there is the capacity to meet it, and there is particular value in any measures we can take now to increase capacity and improve our industrial structure in the longer term.

The scheme for accelerating industrial investment which I announced in my Budget is an example. Although the existing allocation, twice increased, has
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not yet been fully taken up, there is no present need to add to it further. But this scheme gives exceptional value for money, and I want to see it go as far as the traffic will bear. What it means is that any firm which has a viable investment project in its programme and which qualifies under the published criteria can look to the Government for financial help towards accelerating it. Firms which take up what this scheme offers will do good for themselves as well as for the economy and employment.

Indeed, in this as in so many other fields, though the Government can offer incentives, what happens in the end depends on the good sense of individual firms. In the past companies have often failed to invest at the bottom of a cycle, waiting instead until the peak of the upturn, so that their new capacity comes on stream just at the downturn of the next cycle, when it is least likely to be profitable. There are, of course, notable exceptions, particularly among the major companies such as ICI.

But I hope that on this occasion the likely trend of prices will reinforce what is in any case the real interest of British companies. It is likely to be a good deal cheaper for firms to rebuild their stocks and undertake new investment now than to wait until 1977, when world recovery may well have driven prices higher; and at present, as I have said, the money for this is readily available.

I do not claim that the measures I have outlined will in themselves produce a massive impact on the present level of unemployment. I claim that they will create jobs, or save jobs far more rapidly and far more cheaply than would be possible through any Government action to reflate demand. They do so by means which will strengthen our balance of payments rather than weaken it, and which will allow our attack on inflation to be pursued to ultimate success.

Moreover, besides the immediate alleviation they offer to the problem of unemployment, they will strengthen our ability to take advantage of the surge in demand which will gather force in the coming year. Without these actions, the expected surge in demand might produce the same overheating in our economy in 1977 as we suffered in
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1973, overheating which, as the House knows, lies at the root of many of the problems from which our economy is now suffering. For all these reasons I commend them to the House.

Those of us who have now had time to study the Report of the Central Policy Review Staff on the Motor Industry will have been struck by one phrase that is used about the present attitudes of people in the industry. Paragraph 7, in page 130, says that
we have been struck by the degree of insecurity and anxiety throughout the industry … concerning the industry's prospects. There is a growing concern about the future and at the same time a declining belief that anything can be done about it".
That anxiety and concern extends far beyond the motor industry and it will most certainly not have been reduced by yesterday's announcement, still less by the modest statement—to put it no higher than that—that the Chancellor has made today.

There is a disturbing feature, which gives me some cause for immediate concern, about the way in which the statement has been made. This debate has been heralded as the occasion when the Chancellor's Christmas package, of some moment and of some magnificence, was to be unveiled. That was promised for weeks in speech and in answer in the House, and in party political broadcasts.

I was therefore very concerned when the Chancellor was not disposed to make any announcement yesterday about the important matters that we were to debate today. That, after all, would have been in accordance with precedent. It is what was done in July 1966, and it was done by my right hon. Friend, now Lord Barber, in December 1973. It would have been courteous to the House, which would have been unusual for this Government. But in fact we see now why no such announcement in advance was made. The Government are so bereft of anything that could be put together as a contribution to their so-called economic strategy that, if today's announcement had been made yesterday, it would have evaporated by the time we came to today's debate.

1420
The Chancellor of the Exchequer has scraped the barrel in every corner, and his announcement today falls so far short of expectations that the nation at least will be gravely disappointed by what he said.

I shall say a word or two about the measures themselves, but I am sure that that will not take a great deal of time. However, they need to be placed in the context of the Government's economic policy as a whole, so far as that can be identified.

I wish to make it clear that I shall be inviting my right hon. and hon. Friends to divide the House tonight against the Government's position in this matter. But we shall not be voting against the modest clutch of measures so far unveiled. Nor, as may be misrepresented hereafter, shall we be voting for higher unemployment. The truth, as some Government supporters are now beginning to realise, is that higher unemployment is still inescapable. We deplore the human consequences of that as much as anyone, but we shall vote against the Government to emphasise our judgment that they are overwhelmingly responsible for the nation's present difficulties and that so long as they remain in office there is no real prospect of a return to economic sanity. In other words, we shall record our firm view that the time has come for the Government to go.

There is something remarkably characteristic about the way in which this Government have: handled the whole problem of import controls. The pattern has become familiar as we have watched them over the months during which they have been in office.

Stage one is always a robust denunciation of the idea, characteristically by the Prime Minister.

As the months go on, stage two is the increasingly vocal advocacy of the opposite approach by back-stage members of this Government—the bosses of the trade unions, members of the Tribune Group, vocal as always in their advocacy of a siege economy—the entire performance generally orchestrated by the growing number of ministerial discards from the Government and led off-stage not only by Mr. Ron Hayward but also, inevitably, by the Secretary of State for Energy, as always leading a double life as kind of
1421
player-manager, playing in one team whilst seeking to manage another and thereby enjoying the inestimable advantage of being able to score goals at both ends with the satisfaction of knowing that he has scored against his own side as well as for it.

Stage three, again very characteristically, is for Ministers to make speeches arguing both sides of the case, with the Foreign Secretary and the Chancellor of the Duchy of Lancaster preaching the virtues of free trade, with the Secretaries of State for Employment and Energy arguing in the opposite sense, and with the Chancellor of the Exchequer characteristically making increasingly Delphic utterances, confident that at the end of the day he will come down on whichever side looks like winning.

Stage four is reached when the Prime Minister finds some occasion to throw overboard his original commitment to virtue, always in such a way as to rouse totally false expectations in at least half of his party while putting the fear of God into the other half and, secondly, as to cause the widest possible offence and misunderstanding amongst other Governments upon whose sympathy and understanding, God knows, this Government depend. The Prime Minister ought to find the time to learn that he cannot go on dealing with Heads of State as he tried to do at Rambouillet with the same sly and devious techniques that he must have perfected over years of practice with the National Executive of the Labour Party.

Stage five is a long period of delay, dispute and struggle to reconcile the warring factions over the conflicting commitments of the Labour Party with the realities of economic life—[Interruplion.] The hon. Member for Penistone (Mr. Mendelson) may not like this, but it is a revealing insight into the way in which his party operates.

Meantime, while delay continues, those who might be affected by the measures take pre-emptive and evading action, which is why today half the stock of motor cars in the United Kingdom is said to consist of foreign imports, because people hastened to get motor cars behind restrictions that were never imposed.

Finally, we have the dénouement—the belated announcement of the Government's
1422
conclusions. They are either a substantial set of measures, in which case they are wrong, or purely cosmetic measures that achieve nothing except the manifest disappointment of the expectations of many Government supporters and do wanton and unnecessary damage to international relations.

The measures announced today by the Chancellor of the Exchequer fall very close to that last pattern. The Government have recognised that any significant measures for import controls can do nothing but harm. They would invite retaliation, they would make inflation worse and, so far from providing a breathing space, they would encourage degeneration, promote inefficiency and eventually multiply the very unemployment that they are designed to prevent.

We are glad, on this issue at least, that the Government have listened to the advice of the Chancellor of the Duchy of Lancaster. We are glad that they have been able to come to conclusions that have been almost entirely arrived at within the scope of their existing obligations to the EEC. On textiles, the Multi-Fibre Arrangement remains the foundation of the present and of the future. On shoes, as I understand it, nothing further happens than an agreement to continue existing voluntary restraints. On television tubes, again, we are delighted that nothing further happens but sensible arrangements for surveillance. We are glad, too, that the Government have avoided the grave risk of the damage that would have arisen if they had attempted to introduce import controls for motor cars.

For all this sanity, much thanks. But there are still some areas where the representatives of certain trades have pressed the case for faster scrutiny of, specifically, anti-dumping measures. On this point, there is no sign of acceleration in the way that the Government will consider these proposals.

The Chancellor of the Exchequer said a few words about hire-purchase control. He is to be congratulated on not relaxing the terms except in the limited area of those receiving disability allowance. In relation to sales of motor cars, that would have been totally crazy. At a time when imports are soaring and yet cannot be controlled, and when there are long waiting lists for British cars, it would be wrong
1423
to do anything to encourage the expansion of the market for cars by relaxing credit controls in that area.

In the other areas to which the right hon. Gentleman referred, again, there is a curious feature. In ordinary circumstances, there might have been some sense in relaxation, but this represents yet another round of tinkering, of the kind so strongly condemned in the CPRS Report on the motor industry. Our anxiety is that in areas involving consumer durables, especially electronics, there is at least a risk that imports will be increased by relaxation at this time and that savings on which the Government depend will also be reduced.

But there is another curious feature. Even in this area, the right hon. Gentleman's modest proposals for hire-purchase control demonstrate the erratic, haphazard way in which this Government have been handling the economy. What are the industries that have been singled out for special help? The Chancellor of the Exchequer says that special help will be given to, of all things, the caravan and boat building industries. Why are the industries in such difficulties? Because they were the industries, amongst others, selected by the Chancellor for the imposition of 25 per cent. VAT. The same is true of television rentals.

When the Government moved to introduce this so-called luxury tax of 25 per cent. VAT, they were warned by their own supporters that it would cause damage on the very trading estates on which many of the regions are acutely dependent. The hon. Member for Ormskirk (Mr. Kilroy-Silk) pointed out the tragedies which could befall the trading estate in his constituency, which is next door to that of the Prime Minister. Indeed, we have read in the last week or two of social disturbance and stress in Kirkby New Town, where 40 per cent. unemployment figures have been recorded. That is the consequences of the erratic management of the economy which led this Government to impose the absurdity of 25 per cent. VAT at that time.

Turning to the job protection measures which the Chancellor has announced, we are glad that the Government continue to accept the argument, which may not be wholly pure in intellectual terms but is true in practical terms, against large-scale
1424
Keynesian reflation. Certainly some of the measures announced by the Chancellor are sensibly directed to removing some of the worst obstructions in the labour market. We are glad that he has been able to build on the Industrial Training Act with the establishment of the Training Services Agency—work which had been put in hand by my right hon. Friends over the years. In that respect, the right hon. Gentleman is to be congratulated.

There are many other foolish obstructions to the way in which the labour market works, for many of which this Government are responsible. There is the extent to which they have made it harder for workers to move to new jobs, by extending control over furnished lettings, thereby taking tens of thousands of houses off the market. There is the extension of municipal ownership and the blight of municipal redevelopment, taking hundreds of thousands of houses off the market. There is the refusal of many councils to permit the sub-letting of council houses and the application of Socialist doctrines preventing the sale of council houses.

All these matters make it more difficult for workers who are losing jobs in present circumstances to move to other places where jobs may still be available. All these matters are characteristic of the impact of Socialism on our economy, but, taken together, the measures suggested by the Chancellor represent a modest response to the situation.

This Government now bear the lion's share of responsibility for the present soaring level of unemployment, because they are without a strategy that offers any solution. Because they have got themselves into this situation, we intend to vote against them tonight. They have got themselves into this situation because of the extent to which their policies throughout—this has been the Chancellor's style again today—have been characterised by self-deception and false optimism.

The Prime Minister, speaking at a banquet at the Guildhall last year, said:
We have made clear"—
this is one of the euphoric observations to which he often commits himself at the Guildhall—
that we shall not seek to salve or to mitigate the problems which we face by beggar-myneighbour policies by hindering trade through
1425
artificial restrictions on imports, nor by a lurch into a policy of deflation and unemployment.
Yet today the situation is precisely the opposite. Throughout the 12 months during which the Prime Minister has been making speeches in those terms, deflationary policies, on the Chancellor's admission, have been sustained inevitably and inescapably, and unemployment has risen inevitably and inescapably. The Chancellor is still seeking to take credit for the fact that the recession in this country is less severe, and has occurred later, than in other countries. But that, too, is part of the tragedy, because he helped, as he again sought to say this afternoon, to generate the continuance of inflation during the last year. His policies have now made further increases in unemployment unavoidable. Unemployment will continue to rise, and the Chancellor and the Government are responsible for it.

We have for too long had to face a policy of slither, shift and drift—a policy of false expectations and of the dramatic upturns to which the Chancellor still looks forward early in the new year. That policy has always involved—

The problems of success may sometimes be more creditable than the problems of absolute failure, which is what we have had from this Government. That policy has always involved running away from the truth.

The Report of the Central Policy Review Staff makes it clear that, beyond the modest measures recommended by the Chancellor, what is needed above all at the present time, if we are to get away from the prospect of economic decline, is leadership of a kind which the Government should be ready to give; leadership of a kind which must be candid, consistent and courageous. That is leadership of a kind that I fear we shall never have any hope of getting from this Government.

We have all, often enough perhaps, looked for easy answers to our economic problems, and we have all sometimes tended to think that we have found them. However, it is time for the Government to cease this endless round of self-deception. It is time for them to cease from constant looking for the answer that is
1426
comfortable and, apparently, kind. We cannot go on, as they have been going on, pursuing soft option after soft option. We must have the courage to lead our people to face the truth. That, again, is the lesson of the CPRS Report.

Looking at that Report, one sees that the most important passage reads:
There is no disguising that they"—
the proposals
—"will involve a sizeable drop in the level of employment in the motor industry. However, the consequences of failure to bring about these changes will be a great deal more severe than are involved in the changes themselves. The industry could be reduced to a third of its present capacity, with direct employment in car manufacture at probably less than a third its present level and indirect employment in the component industry affected similarly.
Do the Government accept that diagnosis, or do they not? The Secretary of State for Scotland, when closing the debate yesterday, said that he had what he was pleased to call faith in the British motor industry. We would all be ready to have faith in management and workers in the British motor industry if the Government were prepared to face the implications of that diagnosis.

The lessons set out about the motor industry spread far more widely than that. Throughout the steel industry, throughout the coal industry, on British Railways, in the docks and in many other sectors of industry, the same lessons have to be learned. The lesson is that any attempt to save jobs today is the sure way to destroy still more jobs tomorrow. Only when the necessary structural changes can be effected can there be any prospect of returning to high and stable levels of employment. The Prime Minister and the Chancellor of the Exchequer know that repeated failure to promote the redeployment of resources and human skills can only lead eventually to economic collapse. That to our relief, was the message of the Chequers strategy. All that has now been wantonly cast away. The prime responsibility for that failure rests on the shoulders of the Government and, in particular, on the shoulders of the Prime Minister.

It is ironic to recall that at the beginning of this year the Prime Minister, in what was described as
a blunt warning … never … stated so clearly since Labour were returned to office1427
said:
With public capital, and an appropriate degree of public control involved
—that is ironic—
the Government could not justify to Parliament or to the taxpayer the subsidising of large factories which could pay their way but are failing to do so because of manifestly avoidable stoppages of production.
All those proud words have been blown away in the day-to-day decisions of recent weeks. We shall not get away from that sorry course unless we come back to certain simple but important propositions. First, new jobs can be won only if the private sector can again be offered the prospect of success. The Chancellor was preaching earlier about industry's failure to invest at the bottom of the cycle, but he could do worse than ask himself why that is. How can industry be expected to undertake investment in the face of all the other constraints that this Government continue to impose upon it?

The Bank of England quarterly report a week or two ago said that the real reason why investment could not be expected to turn up was that business had no prospect of profitability, and went on to spell out the reasons for this situation. It said that
despite last year's stock relief, the rate of profits appears to have fallen so low as to leave little incentive to new investment…. A change in the price code to allow more adequate profit margins would help to give firms some assurance that they will be permitted to rebuild profit margins on the scale required to provide a probability of reasonable profits on investment.
Until the Government recognise that truth, they will preach in vain for investment to be expanded. The private sector cannot hope for success as long as the Government continue to heap the entire burden of disinflation upon the private sector. There is a limit to a contracting private sector's capacity to maintain an ever-increasing amount of public expenditure as well as higher taxes. Substantial reductions in private expenditure, starting as soon as possible, are an unavoidable imperative for the restoration of economic prosperity.

The Cabinet is already discussing where the cuts should be. The
1428
Chancellor has apparently secured the agreement of his colleagues to cuts of £3,000 million. In debate after debate we have spelt out where the cuts should be made. The Government should immediately abandon any further plans for nationalisation and tackle, sooner rather than later, the continuing growth of all subsidies. They will have to face the fact that they cannot go on overspending at the rate of £12,000 million. If reports are to be believed, the Chancellor is having some success in carrying this argument, uncomfortable though it is—not for this year, but for next year. These cuts are the only way of opening up the prospect of future jobs of real value coming into existence.

This continued profligacy in Government spending generates the fear that inflation will not be brought under control. It destroys the confidence on which future investment must depend and so destroys the prospect of new jobs. The Chancellor knows that perfectly well. In his Budget speech he said that a borrowing requirement of £10,000 million was too high by any standards and was inconsistent with his strategy. He set himself to reduce it, but we all know that he has failed by billions of pounds and that he has no prospect of doing better next year. He continues to defer action, waiting for that upturn to which he is looking forward so confidently. However, his continued extravagance will stifle that upturn before it even begins. This is the message driven home again and again by reports from the Bank of England and other people. The prospects of new jobs will continue to wither away until the Government accept that fact.

Until this House turns them out, Britain will be burdened with a Government who have lost whatever sense of direction they ever had. We are confronted with a deeply divided Government who are still taking the nation closer and closer to the abyss. If reports, which multiply in their frequency, are to be believed, there are, inside as well as outside the Cabinet, two fiercely contesting factions struggling for control of the economy while it continues to drift in a tragically wrong direction. On the one hand, we have the Tribune Group, which would take us God knows where, and, on the other, the Manifesto Group—the self-professed Social Democrats who
1429
must be very near despair. Every victory they appear to gain for sanity is all too swiftly dashed from their hands by a sudden reversal of policy by the Cabinet.

How much longer are the so-called moderate supporters of this Government prepared to go on lending their support to policies of which they must, in their heart of hearts, deeply disapprove? When, if ever, will they be men enough to call a halt to the continued progress of this Government's economic policy in a totally wrong and disastrous direction? Until that happens we face the prospect of continued huff and bluster, and the Prime Minister will continue to preside, if that is the right word, over a continued slide towards disaster.

In his New Year message, the Prime Minister said:
By the end of the year, I believe Britain's economic prospects will be seen to have greatly improved … matched by the industrial and social strength which it is in our power now to assert, I believe we can, unitedly, make 1975 the year in which Britain began to climb back to success.
That is a pretty remarkable text to look back on with inflation at well over 25 per cent., with unemployment at well over the figure of 1 million which the Prime Minister and the Chancellor of the Exchequer promised us would never be reached—with the trade gap of this country as large as that of all OECD countries, and with public expenditure still totally out of control. There is even the prospect that this country's economic sovereignty will shortly shift—some may wish sooner than later—into the hands of the International Monetary Fund. Yet the scene appears as tranquil and euphoric to the Chancellor of the Exchequer as it does to the Prime Minister.

In another speech at the Guildhall this year, the Prime Minister said:
I have not, in all my years in Parliament, felt able to assert with more confidence than I do tonight my belief that, fortified by our growing economic strength, Great Britain's influence in the world, already high, will increase and our influence for good transcend anything in our historic past.
Those are remarkable words. If the Prime Minister believes that, he will believe anything. It is long past the time for the end of his disastrous and deceitful reign. It is long past the time for a Government who have produced today's packet of measures, which are of little relevance in
1430
the present grave economic circumstances of this country, and long past the time for this destructive Government to be replaced. The sooner the better.

After listening to the right hon. and learned Member for Surrey, East (Sir G. Howe) one can understand why South Wales always votes Labour so overwhelmingly. He should be ashamed of his speech. He and his party have no answer to the economic problems of this country.

I wish to express my sorrow at the passing of the hon. Member for Coventry, North-West (Mr. Edelman). I was his constituency secretary in 1959 and I knew him well. Like many hon. Members, he had his critics, but when intervening in political issues his timing was immaculate and he had an abundance of personal charm. His winning ways were quite overwhelming. He will be sadly missed.

The city that he represented for 31 years is now in deep economic trouble. Man-made fibres, machine tools and electrical products are all represented in a big way in Coventry. In addition, Coventry has experienced the long saga of the motor industry. There was the trouble over British Leyland and now the episode of Chrysler.

I intend to support the Government tonight, although I have had some heart-searching about it, as have many other hon. Members. I wish that the Government had exerted more control over the public money they are spending. Coventry will experience a great many redundancies to add to its difficulties. I have a little experience of the motor industry in that I spent 10 years in it before coming to the House. I feel in my bones that the Chrysler rescue operation will eventually be a success, despite the hard road that will have to be trodden in the immediate years ahead.

Coventry is a city that deserves to succeed. It is essentially classless in character and has no racial prejudice. I was annoyed yesterday by what the hon. Member for Banff (Mr. Watt)—a member of the Scottish National Party—said. He was prepared to see the whole Chrysler operation in Coventry go to the wall. As he spoke, I thought of some of the Scots citizens of Coventry. The Lord Mayor, Mr. Charles Ward, is a Scot to
1431
his bones. My hon. Friend the Member for Coventry, North-East (Mr. Park) is a Glaswegian, and before coming to the House was the leader of the Chrysler shop stewards. Coventry has given employment to many people over the years. It is a great international city.

They are there because of the capitalist system, against which the Labour Party has fought for so long. In that fight I hope that we shall have the full support of the Scottish National Party.

There are Press reports this morning—allegedly based on up-to-date figures—that Britain is over the worst of the recession. I hope that that is true. According to the October figures, industrial production shows faint signs of picking up, and there is more optimism in the air. Nevertheless, the realities are not quite so simple.

There is, for example, the matter of the British Steel Corporation's proposals for redundancies. Many thousands of people are involved, 13,000 in Wales. Secondly, there has been the accusation of "codswallop" uttered by the Secretary of State for the Environment, and remarks from the leader of the National Union of Railwaymen to the effect that the Secretary of State for the Environment is telling a pack of lies. Eventually the truth will emerge about what is to happen to the railways. Thirdly, there is the building trade which already has high employment and has yet to experience the full effect of local authority cuts.

I represent Newport, which is a highly industrialised town, perhaps a microcosm of the rest of industrial South Wales. Newport will certainly be affected by the three factors I have mentioned. There is also the question of Llanwern, on my doorstep, and getting into operation the
1432
third blast furnace which involved expenditure of millions of pounds. I hope that flexibility and conciliation will prevail in the resumed negotiations to get this vital plant into full operation. Those principles should have prevailed much earlier. If that is not done now, when the upturn in the economy occurs and the car industry expands there will be a great shortage of sheet steel. The BSC will have to scour world markets for sheet steel and that, in turn, will be highly detrimental to our balance of payments and the British steel industry.

I wish to quote briefly from a letter I received recently from Mr. J. K. Stuart, the Secretary of the British Transport Docks Board:
British Transport Docks Bill—I am writing to inform you that it is the intention of the British Transport Docks Board to promote a private Bill under the above-mentioned title in the parliamentary Session 1975–76. The proposals in the Bill, in so far as they affect your constituency, are limited to seeking an extension of time for the acquisition of land required for certain docks which the Board are already authorised to construct at Newport namely, Works 7 to 13 inclusive authorised by Section 11 of the British Transport Docks Act 1967 (Newport-Uskmouth terminal).
That scheme, approved by Parliament in 1967, was shelved by the BSC. I appreciate that the letter does not commit the BSC, but if the go-ahead were given to the Docks Board for the scheme it could transform the scene at Llanwern works. The shelving of the scheme undermined morale at Llanwem. The problem there is basically insecurity amongst the people who have congregated in that area from many parts. This iron-ore terminal would make Llanwern into the fully integrated works which it needs to be. The principle of full employment is no longer the sacred cow it used to be, but for how long will the TUC accept an incomes policy when unemployment is rising?

To say the least, the Chancellor's package has erred on the side of caution. It is a case of too little, too late. The Government have certainly delayed for too long over import controls. It is alleged that there has been a dispute both inside the Government about these measures and with other Governments both in Western Europe and in America. We should not forget the IMF loan, and the question arises whether the IMF will accept the principle of import controls.

1433
In its list the TUC mentioned such industries and products as cars, clothing, footwear, yarn, television tubes and electrical goods. This afternoon my right hon. Friend went a little way to meeting some of those demands, but I doubt whether the TUC, the trade unions, or the workers they represent will regard the measures as sufficient.

If the British Steel Corporation could get its plant working to full capacity a very strong case could then be made for curbing the current massive imports of steel. The Government should return to the principle of full employment in the economy, however stringent the measures which may be needed to bring about that state of affairs. That principle is enshrined in the Labour movement. There is no greater waste than the waste of human resources.

I strongly supported the speech by the hon. Member for Newport (Mr. Hughes). When I listened to the right hon. and learned Member for Surrey, East (Sir G. Howe) I wondered whether we were having an economic debate or a debate on unemployment. I did not hear him put forward one solution or suggestion for dealing with the short-term situation as opposed to the long-term problem. Clearly, in the long-term we hope, whatever economy is agreed upon, that the country will be run on the basis of full employment.

I have always believed that one should deal with the facts as they are and not as one would like them to be. The facts are that there are more than 1¼ million people unemployed. I should have liked to hear constructive suggestions from the Opposition Front Bench about what it would be doing in this situation. The right hon. and learned Gentleman gave the impression that his party accepts the present situation and takes the view that there is nothing it can or would do about it. The impression was that its strategy would be to try to solve unemployment on a long-term basis and that it would accept in the short-term a figure of 1¼ million unemployed. However, the Conservatives must say what they mean by short term. Are they talking about 12 months or two years? For how long would they be prepared to tolerate unemployment at that level, and at what
1434
point would they consider that unemployment had risen to an unacceptable level?

I suspect that the Government are now using unemployment as an economic weapon. I still have some doubts, because I know that that is basically foreign to their principles. Many of us, however, find the current level of unemployment unacceptable and extremely difficult to understand from a Labour Government. I am delighted at the Chancellor's measures, but they are too little and in many cases, certainly on textiles, they may be to late. Nevertheless, anything is better than nothing, and credit should be given where it is due for at least an attempt to deal with unemployment in the short term.

I am particularly interested in textiles. The industry will be disappointed that the Chancellor said nothing about strengthening the laws on dumping, about the possibility of the Government doing much more to prevent dumping, and of putting the onus of proof over dumping more on the country of origin than on the person who makes the complaint. The Chancellor talked about limiting the imports of blouses, skirts, trousers and certain other garments. I tried to get clarification of this during his speech, but I was unsuccessful. Is the limitation on the import of these items to apply to the made-up goods, or will the drafting be sufficiently tight to ensure that they do not come in on the basis of being three-quarters finished, with the last quarter being completed in this country? If the controls are to apply merely to the completely made-up garment, the restriction will be insufficient.

I hope that the Minister will say something about shirts. Are they included in the limitation provisions? The Chancellor may have mentioned them, but I did not hear him. He said that the Government were now negotiating with Portugal about a limitation of imports. May we be told how long the negotiations are likely to take? In the textile industry it is not unknown for negotiations to drag on for years, and certainly for perhaps eight or even 12 months. We may still be talking about negotiations with Portugal at Christmas 1976. The Prime Minister first made a statement about import controls last May. He said the Government were urgently considering the matter. It has taken seven months to reach even the
1435
present stage, so I hope the negotiations will be speedy.

In summary, the textile package is a crumb of comfort. Half a loaf is better than none. We would have preferred a full loaf and would have liked some cycling of quotas over the long term. I hope that the Government are prepared to think along those lines.

On the job creation programme, I hope that the Government will consider the technical colleges. I am trying to put forward constructive points. I was a member of an education committee for 23 years and its chairman for seven. We have in our technical colleges huge amounts of capital equipment, some of the most superb machinery in the country, often far better than companies can afford. The Department of Employment and the Department of Education and Science should get together to see whether these capital resources, which have been paid for by the taxpayers and ratepayers, cannot be geared much more for retraining than just further education.

The country may be a little disappointed—I certainly was—that the Chancellor said nothing about the construction industry, which faces grave unemployment. It is difficult to reflate this industry when the Government are considering major public expenditure cuts, but it is ironically wrong that, at a time of grave housing shortage, about 200,000 construction workers should be drawing unemployment pay. It cannot be beyond the wit of man or Government to ensure that unemployment money paid to builders, bricklayers and plumbers is paid to them, instead, to build houses, I urge the Government seriously to consider this suggestion. If it means breaking rules, let us do so. If it is a question of unemployment pay coming out of one pocket and capital development going into another, surely it is not beyond the wit of the Government to devise some such formula. Instead of paying builders to be on the dole, we should pay them to build houses.

I have had the pleasure of starting a small company from scratch. As I have said before, I never describe myself as a "small business man". I describe myself as a business man with a small company. I have found building to be
1436
one of the major problems. One can raise money for equipment, but one needs a building in which to start. When building workers are on the dole and we are looking for opportunities for long-term investment and for encouraging small industry in the long term, I urge the Government to consider whether unemployed building workers could be used to build small factories which, when the economy picks up, can be made available to small companies that want to start new industries. They could build them now, while the resources and the workers are available.

I have tried to be constructive. We are talking about the lives of men and women. Unemployment is degrading. It takes away the dignity of man. I have seen it in my own family; it is a terrible thing. Of course Ministers are not happy about the situation. They are human beings, after all—we may have our doubts about the humanity of some of them, as opposed to others—and I cannot believe that they are happy when over 1 million men and women are drawing unemployment pay.

That is why I have tried to address myself constructively to our problems, instead of indulging, as the right hon. and learned Member for Surrey, East did, in a long political tirade which made no contribution to a major problem. It is a major problem, not just of this Government but—what I consider far more important—of men and women, human souls, who are entitled to a proper living on God's earth.

It is the custom for many hon. Members to say that they do not wish to follow the speech of the previous speaker, but I should like very much to follow that of the hon. Member for Rochdale (Mr. Smith).

This is a debate about unemployment. At the 1974 Labour Party conference the Prime Minister made a speech about unemployment which I think sums up the view of the entire Labour movement. He said:
None of us joined this party, devoted our lives to this party, to make it the party of unemployment. We reject that solution emphatically, decisively, once and for all.
I want to speak about the human side of unemployment. I was brought up, as
1437
were many other hon. Members, during the years of the depression. I should like to tell the members of the Scottish National Party that one of the most profound experiences in my life happened when the Glasgow unemployed, supported by Englishmen who were also concerned about unemployment and the effects of the capitalist system, marched to London and stopped in my town on the way to explain to us the terrible crisis that they faced in Scotland.

Since then, I have become a Member of Parliament for Liverpool. In Liverpool at the moment, 10.6 per cent. of all workers, male and female, are unemployed. That means that in my constituency and other Merseyside constituencies there are whole streets of workers in which a quarter or more are unemployed. My hon. Friend the Member for Ormskirk (Mr. Kilroy-Silk) represents Kirkby, where 25 per cent. of male workers are unemployed.

It is interesting to note that the report by the police about Kirkby said that despite all the problems of unemployment there was no racial or religious conflict there. I draw that to the attention of the SNP. The problems that we face on Merseyside are just as great as those in Scotland. I do not want to boast about that, because it is a tragic fact. But these matters are not a question of nationality. Some English areas suffer just as much from unemployment and slum clearance problems as does Scotland or Wales.

I am disappointed that the hon. Gentleman should seek to make this strong anti-Scottish attack tonight. Does he accept that we are talking
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about a subject concerned not with racialism but with political sovereignty? We believe that Scotland should be compared not to some regions in England but to other small countries in Europe, such as Norway, Sweden, Denmark, Austria and Switzerland, which have had consistently lower rates—

The hon. Gentleman has proved precisely the point that I was trying to make and I have no further comment to make on that matter. Whether a person is Scottish or Welsh, or comes from certain regions of England or Northern Ireland, he faces the same dreadful problem of the growth of unemployment, which must be dealt with by the policies of central Government.

I want to deal with the question of unemployment in a personal sense. I do not know how many hon. Members have faced unemployment. I used to work in the construction industry, and the terrors of unemployment were never quite the same for me as they were for workers in a more stable industry. The construction industry was not stable, so I worked for a period and when the contract was completed, I found myself out of work. I then hoped that another job would come along. The shipbuilding and ship repair industry is similar to the construction industry. We did not have quite the same fear of unemployment, because it was part of our lives.

It was never a joke to walk the streets of Liverpool as I did, sometimes for as long as a month, seeking employment. At that stage, despite all our problems, we knew that something would turn up. Now, nothing turns up—that is the difference. There is no hope for workers.

In the construction industry there are now 170,000 unemployed persons. I take the point made by the hon. Member for Rochdale, because in my area 13,000 construction workers are unemployed. Nearly 4,000 of them are highly skilled. At the same time we have a housing waiting list of about 22,000. It is ridiculous and criminal that those workers should be unemployed and that at the same time people should come to my interviews on Saturday mornings and ask
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"What can you do, Mr. Heffer, to help me get a house, because I am living with my mother-in-law and we are overcrowded?" I am told that problems arise and people are having nervous breakdowns because of the housing stress and problems.

Some of them have not been employed for between nine months and a year, unforunately. It would be difficult for me to say where they were recently employed when they have had no recent employment.

Many workers who wish to move to other parts of the country are unable to do so, despite Government assistance which I know is forthcoming, because no accommodation can be provided for them. It is all very well to talk about transferring the unemployed elsewhere, but it is useless unless accommodation can be provided for them. That is a great problem.

I get rather emotional about the question of unemployment, because I have suffered from it. During a period of full employment I once spent three months out of work. At the end of three months I began to think that it was I who was responsible and at fault, not the system. A person may be the best tradesman going, but in the end he loses confidence. I spent seven years as an apprentice, and I believe that I was always a first-class craftsman. I was never sacked for being a bad craftsman. I may have been sacked for being a nuisance and a trade unionist. I can hardly look some of my building industry comrades in the face at present. I say that as a member of the Labour Party who supports a Labour Government on the basis of what the Prime Minister said at the 1974 Labour Party conference.

What we have done to date is simply not good enough. I am not given to quoting or supporting much of what is written in the various national newspapers, but I agree with an article that was published in The Guardian in September, when my right hon. Friend the
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Secretary of State introduced the measures. The article said that the measures were more symbolic than substantive.

That is another way of putting it. We are told that youngsters in areas such as mine have been offered £30 million. We could use that money in one day on Merseyside and still not solve the problem. Many jobs are created which last for a few months, and because they are blind alley jobs those who do them are not given any training. They have to go on the dole, and the position is worse for them than if they had not even had the job.

The hon. Gentleman does not need to tell me that it is my Government—I know that. That is why I am talking to them in this way. I do not need lessons from the hon. Gentleman on how to talk to my hon. Friends about Government policy.

We cannot solve this problem by that type of action. We need something more substantive. [HON. MEMBERS: "Hear, hear."] Before hon. Gentlemen get too enthusiastic about that statement, let me turn to the arguments advanced by the Opposition.

The arguments put forward by hon. Gentlemen are remarkable. The right hon. Lady the Leader of the Opposition, the right hon. Member for Leeds, North-East (Sir K. Joseph) and, today, the right hon. and learned Member for Surrey, East (Sir G. Howe) have tried to convince us that the problems are all due to a Labour Government who are responsible for the growth in unemployment. We are told that we have too much Socialism.

The Opposition say that if we did not have Socialism we should not have unemployment. I argue that the crimes of the capitalist system are being blamed on the Labour Government, and if the Labour Government are guilty of a crime it is that they are not Socialistic enough and are not dealing with the crisis by working towards a planned economy.

Does my hon. Friend accept that in the package of measures that has been announced today there is £70 million for stockpiling by the British Steel Corporation? Does he accept that the Corporation sought that money in the City, among the private owners of capital, and that those private owners were so concerned about the unemployed, or the potential unemployed, in the steel industry that they refused to support the scheme? Once again, it comes back to the social responsibility of a Labour Government.

My hon. Friend is absolutely right, in the sense that in the last analysis Governments have to take responsibility.

Let us consider the Chrysler situation. This is an important matter. If I have a criticism of the way in which my right hon. Friend and hon Friends in the Government have handled it, it is not of the fact that they are trying to save jobs. I shall support the Government tonight and I shall vote for saving the jobs at Linwood and Coventry, and elsewhere. I regret that some jobs will have to go in both places, because I think that we could have dealt with this matter differently. We should have brought that company into complete Government ownership, merging it with British Leyland, so that when we did get an upturn in the economy—which everyone convinces me will come, although I am not absolutely certain, under our system, that it will—we could rationalise it and lay the basis for a really sound and viable motor vehicle industry in this country—and not necessarily only a motor car industry.

That is what we could have done. That is what the Labour Party, in its manifesto and particularly in its programme, has suggested we should do in dealing with this sort of problem. Unfortunately, what we have is the worst of both worlds. We have neither one thing nor the other. We are just bolstering up a multinational company, with no guarantees whatsoever that at the end of the operation it still will not leave this country and our workers flat, so that the Government will have to go in and take it over. That is the problem. However, that does not lead me to vote against the Government, or to abstain, because
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if it means saving jobs I shall vote for the saving of jobs, although I may not necessarily agree with the way in which the matter has been dealt with by my right hon. and hon. Friends.

I think that the Secretary of State for Industry originally argued on the basis of the Chequers statement, which is very much in line with what the Conservative Opposition want—that is, that we do not save the so-called "lame ducks". That was the way in which the Government started off. But the political and economic realities led them to do something else. Then, instead of accepting the Benn-Heffery line they accepted something in between, which was the worst of all worlds and not in line with what the Labour Party, its National Executive Committee or its conference wanted. However, I shall support the Government in relation to saving jobs.

I have spoken for longer than I intended, although I have had a number of interruptions. I tell my hon. Friends that the measures announced by the Chancellor today are to be welcomed. I must not go too far on this subject. One can hardly call it reflation, but it is a step towards reflationary measures. Today's measures will be helpful in a minor way. However, we need to go much further. I see my right hon. Friend the Secretary of State for Employment nodding at that. I am delighted.

No, he does not. If he does not agree, he does not nod. I have known my right hon. Friend long enough to know that. I have had many an argument with him, and he certainly does not nod if he does not agree with what one says.

We must go much further than what has been announced today. The Early-Day Motion in the name of my hon. Friend the Member for Harlow (Mr. Newens) gives the positive solutions to the problem of unemployment. I believe that we must have further import controls. In our last debate on this subject I argued for a 15 per cent. import control right across the board for a limited period. We may have to be as drastic as that. I know that it would upset many people and that there are arguments about retaliation. However, one knows that in other countries this sort of policy is being
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carried out and similar measures are being taken. Many countries are now imposing import controls, some of which are up to 15 per cent., without our appreciating that it is happening.

We must stop the outflow of capital and make certain that it is used in the United Kingdom, in the interests of its people.

In the construction industry and other similar industries we must have schemes that will create jobs in a positive sense. There must be greatly increased support for the construction industry, because that is the one industry that is the barometer of our economy.

Order. About 50 hon. Members wish to speak in the debate, and the hon. Member for Liverpool, Walton (Mr. Heffer) has been speaking for 23 minutes. It will make it difficult for other hon. Members if there are interruptions.

I apologise, Mr. Deputy Speaker. I have been interrupted. I do not wish to give way, although I do not wish to be discourteous. Therefore, I shall conclude my remarks. I could have said much more, but I shall not do so.

I ask my hon. Friends to read very carefully the arguments developed in the Early-Day Motion in the name of my hon. Friend the Member for Harlow. We believe that that is the alternative and the way to deal with the immediate situation.

Finally, I say that unless we introduce measures to bring unemployment down to below 1 million in the early part of next year, instead of the Labour Party being accepted as the party of full employment we shall have failed our own people, and we shall never be forgiven for it.

The significant thing about the debate is that, mainly from the Back Benches, including the speech of the hon. Member for Liverpool, Walton (Mr. Heffer), there has been a passionate desire to see that the Government, and, I would hope, both sides of the House, return to the basic commitment of trying to maintain full employment.

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In the 15 years during which I have been privileged to be a Member of this House, under all Governments, Labour and Conservative, at times unemployment has risen. The Opposition of the day have normally been very critical of the rise in unemployment that has occurred, both sides of the House have demanded policies of Governments and, frequently, the unemployment problem has been tackled and unemployment has begun to drop. What frightens me about the atmosphere of the debate today, in terms both of the Chancellor's speech and, to some degree, the speeches from the Opposition side of the House, is a near acceptance of the view that present levels of unemployment, or even higher levels, may be acceptable.

I am delighted to hear it. They are totally unacceptable. But, on analysis, one can hardly call the Chancellor's statements and policies the statements and policies of a Chancellor who is passionately concerned to get the unemployment figure down.

There are distinct areas of unemployment for which there is no particular action. I wish to speak of two such areas. Unemployment has doubled over two years. As the Chancellor said, it is at as high a level as it has been for a generation. In one of the areas of which I wish to speak it has trebled over two years and in the other it has quadrupled.

The first area to which I refer is the Midland region, where unemloyment has increased at a faster pace than in any other region—far faster than in Scotland, Wales, the North-East or the North-West. Similarly, the number of vacancies in the Midlands has fallen faster than in any other region. Whereas two years ago there were more vacancies than jobs, today there are 12 people unemployed for every registered vacancy. What concerns me is that there is no indication that the Government are very concerned about the Midlands. When the matter was raised yesterday the Secretary of State for Industry said that when things improve there is a far faster revival in the Midlands. Today, although he mentioned some regions, the Chancellor did not refer to the Midlands at all.

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Whatever the pros and cons of the Chrysler decision, it has basically been decided that the brunt of the redundancies will fall on the Midlands. The Midlands is not an area in which unemployment rises and falls quickly. For most of the past 25 years it has enjoyed consistent full employment. That has disappeared.

When he first became a Minister at the Department of Industry the hon. Member for Liverpool, Walton understandably pursued the positive regional policies in which he believed. I think that he will agree that I, at both the Department of the Environment and the Department of Trade and Industry, believed in and pursued such policies. Looking at the situation of prosperity in the Midlands at that time, the hon. Gentleman toughened up the whole industrial development certificate policy as it applied to the Midlands. I do not criticise him for that decision, but I believe that if he were in the same position today, in spite of his interest in the North-West he would be very concerned about the levels of unemployment in the Midlands. I hope that the Secretary of State for Employment will examine what is happening.

There has been a massive increase in unemployment in the construction industry in the Midlands, as throughout the country. In 1971, when I had responsibilities for the construction industry, its level of unemployment was high. We introduced a range of measures that got large numbers of men back to work. I realise that the cry now will be that such measures would mean an increase in public expenditure, and so there will be no reintroduction of the improvement grants that modernised every prewar council house in the North-East. I see no economic advantage in thousands of blicklayers, plumbers and electricians being unemployed when the country has massive construction needs.

I understand the public expenditure argument, but the construction industry brings in no great flow of imports. Getting it back to work would substantially improve the atmosphere and cut out all the unemployment benefits and social security payments to the men involved. There would be a considerable net benefit. I hope that the Government will take action in this regard for the Midlands and other areas.

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The second area in which unemployment has quadrupled is that not of a region but of a group of people. I hope that the Government will give some thought to the problem of the West Indian community. Unemployment among the West Indians has risen fourfold in the past two years—from 3,000 to 14,000. Most of those concerned are young people. That official figure is inaccurate, because the last survey by the Department of Employment showed that only half the young West Indians registered for unemployment benefit. The true figure is probably double 14,000.

The Chancellor mentioned various programmes. There are the urban aid programme of the Home Office, various facilities provided by the Department of the Environment and the work creation programme of the Department of Employment, but none of those has made any impact on that community. The country cannot complain about the crime rate of young West Indians if they not only have bad housing but their employment prospects are much worse than those of any other section of the community. I hope that the Government will try to introduce a co-ordinated programme in that sphere.

My right hon. Friend is making an interesting, thoughtful and original speech. On the question of unemployment among West Indian young people, is it not a fact that they are probably the least qualified and least employable? Does that not lead my right hon. Friend's logical thinking to the conclusion that there should be a restriction on further immigration of people from the West Indies and the Asian continent?

I do not think that the flow of people from the West Indies is part of the problem. The size of the West Indian population is such that if we applied the necessary resources it would be easy to deal with their problems, and we should do it. This is a unique opportunity to do something in race relations that would be an example to the rest of the world

The basic strategy did not cone into the Chancellor's analysis. What has gone wrong in this Government's period in office is illustrated by the fact that after 19 months we are producing less than
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during the three-day working week, and the volume of our exports is less than during that period. On the latest figures, we are now producing 5 per cent. less and paying ourselves 51 per cent. more for doing it than we were when the Government came to power 19 months ago. One cannot, over a 19-months period, pay people 51 per cent. more and have them turn out 5 per cent. less without creating massive problems of unemployment and inflation, and all that goes with them.

That is why in my judgment, and in the Government's judgment, it was vital to introduce some form of incomes policy. The dilemma facing the Government is that, having had the co-operation of the unions on a £6-a-week incomes policy, they know that £6 a week is in itself disastrously inflationary. Let us take public sector spending. The hon. Member for Walton mentioned various schemes that he would like to see. He mentioned the pitiful £70 million resulting from the Chancellor's statement today. We should recognise that an extra £6 per week for each employee in the public sector has meant £900 million a year more in local government pay, £600 million more in the nationalised industries and £600 million more in central Government expenditure—a total of £2,100 million. It has meant an extra expenditure of £700 million on public sector pensions, bringing the total to £2,800 million in one year. With production dropping, we cannot pay that amount of extra money and maintain full employment and survive.

I turn to the prospects for next year. Britain is the most de-stocked country in Western Europe. The improvement in our balance of payments has been primarily due to an increase in the price of exports—though the volume has gone down—and a drop in both prices and volume of imports. I hope that the House realises where that drop has taken place. On the figures of the past six months, £1,112 million of the drop, at an annual rate, is in raw materials and £430 million is in machinery. In regard to food, tobacco, beverages, motor vehicles and consumer goods there has not been a drop in our import position; there has been an increase amounting to £180 million.

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When world trade picks up we shall need to re-stock, and we shall have to do so at increased prices. Those increased prices will create an enormous burden on our balance of payments. It will not be an atmosphere in which we shall be able to borrow easily or expand easily. The reality that must be faced by the Government is that, having experienced a period of 19 months when we have seen a 51 per cent. increase in incomes and a 5 per cent. drop in production, the penalty will be paid in unemployment for some time to come.

I, too, am very much concerned about what the Government intend to do about prospects for next year. This afternoon my right hon. Friend the Chancellor of the Exchequer presented the House with a modest package of proposals, no doubt designed to help us through the present winter, but what will happen when spring arrives?

My right hon. Friend spent some time educating us about the contraints under which he is working in terms of import controls and how overseas markets will react. I believe that the Government will have to show a great deal more leader-ship in terms of our domestic economy. It frightens me to see the extent to which this country is still importing—and I do not refer to raw materials alone. I refer to our imports of finished manufactured goods, many of which should be manufactured in this country.

We are dealing with the subject of import substitution. How can we organise our domestic economy so that we may produce for ourselves many of those commodities we now find it necessary to import? When people go to the shops and buy foreign goods, they do not regard themselves as consumer fifth columnists. They are buying goods with price, quality and availability in mind.

Yesterday Parliament experienced a rail lobby. One of the topics that came up in discussion with railway men from the workshops was the fact that our rail-way workshops do not have many of the spare parts that are necessary. The Government are one of the biggest purchasers of goods in the country, and we have only to look at purchases in the nationalised industries and in local
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government to see how much purchasing power there is in those spheres. Can those organisations put their hands on their hearts and say that by far the greatest proportion of their purchases is manufactured in this country?

The relaxation of hire-purchase controls no doubt will help certain industries to overcome the present slackening in demand, but I wonder whether the Chancellor has considered the introduction of preferential rates of hire purchase for British-made cars. The same instrument of selective hire-purchase controls could be applied to some domestic appliance industries.

Surely what is at stake is the whole concept of full employment—a concept that has been accepted in all parts of the House since the end of the war. It is the Government's job to ensure the highest level of employment. It has been a post-war responsibility. Before the war a full employment policy was not an accepted governmental responsibility. I do not want to see any lowering of confidence, in our present situation through too much Micawberism. We face a massive problem of redeployment. I would equate the situation almost with what happened when just after the war we moved from a war-time economy to a reconstruction economy. At that time millions of people were involved in the necessary resettlement and the switch to a strong peace-time economy.

The United Kingdom faces awesome prospects in terms of employment. This is true of the steel industry, the railways, the Post Office and also of local government and the private sector. Despite all that has been said about the ideology of nationalising the shipbuilding industry, that industry is not in a healthy state. One or two speakers have already referred to the considerable unemployment in the construction industry at a time when we need more houses in many areas and when there is an obvious demand for new building. One of the problems has been the constant chopping and changing in the demand situation, which must make it difficult for many managements to know where they stand.

Many people would like to see expanded facilities in training centres and further education colleges. I strongly favour the idea of training centres and
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further education colleges taking on a bigger and more important rôle. But we must not forget that those who emerge from those colleges and centres will be looking for jobs in the skills that they have acquired. That is also true of those who have been through schools, colleges and universities. Surely there should be a much closer linking of our education, employment and training services, so that we are geared to the labour market requirements we seek to establish.

The figures given by the Chancellor of the Exchequer appear to show that the job creation scheme is faring much better than I thought. In some areas we seem to be scrabbling around for projects. The community industry scheme also is doing a useful job in its own way. That scheme is filling a great need in respect of those who would often find it difficult to get an initial start in employment.

It is significant that the debate was opened by the Chancellor of the Exchequer and later tonight will be closed by my right hon. Friend the Secretary of State for Employment. I hope that this is the beginning of a new and strong relationship between those two Departments. Officials of the Department of Employment will need to "walk tall" in the Treasury. Unfortunately, they have had their legs cut off in the last few years because a number of organisations that were once their responsibility have now been hived off to quasi-governmental institutions. This arose as a result of the change made by the previous Conservative Government in the whole system of the industrial training boards.

I hope that when he replies tonight my right hon. Friend the Secretary of State for Employment will spell out some of the long-term proposals coming from St. James's Square for coping with the enormous structural changes that will take place in the labour market—not only in the older, productive industries, but also in the non-productive sectors of the economy.

Many who are engaged in what is regarded as service work are performing a useful community job. Newspapers like the Sunday Times have recently spelt out the tremendous transformation that has taken place in the past 10 years, with the great shift from manufacturing to service industries. The task facing my
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right hon. Friend the Secretary of State for Employment is great.

There is no need to beat about the bush when speaking of unemployment in Scotland. There is no point in saying, as the hon. Member for Liver-pool, Walton (Mr. Heffer) has said, that Scotland is just another region. We are not a region; we are a nation. Just because the unemployment differential between Great Britain and Scotland is narrowing is no reason why we should fall down on our knees and thank the Government and the Chancellor. The gap is narrowing not because unemployment is reducing in Scotland, but because it is rising in Great Britain.

We in the Scottish National Party do not accept that the comparison should be between Scotland and regions of the United Kingdom. As my hon. Friend the Member for Aberdeenshire, East (Mr. Henderson) pointed out in an intervention earlier, other small countries in Europe have much lower unemployment rates than we in Scotland. Our unemployment is now over 127,000, which is a rate of about 5.9 per cent.

I received a reply from the Department of Employment which said that unemployment in Sweden last August was 1.2 per cent., representing 67,000 people; in Fin-land it was 2 per cent., or 48,000 people; in Austria it was 1.3 per cent., or 36,000 people; and in Norway 1.1 per cent., or 17,400 people. Scotland, which is not dissimilar in size, has 127,000 unemployed. The House must realise that Scotland is no longer prepared to be the poor relation of the United Kingdom.

We in the SNP are naturally sorry for those in the Midlands, in the North-West, the North-East, the South-West and else-where who are unemployed.

Unemployment is a human condition which brings human misery. That is why we are sorry for the unemployed. We are sorry not just because it is in our interests to have a healthy English economy, but for reasons of sentiment—although many hon. Members will smirk when I say that. Many of my hon. Friends have experience of life and work in England and we agree that unemployment
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means human misery. Our first concern must be with Scotland.

Appendix 20 of the Toothill Report of 1961 shows that since the beginning of the century unemployment in Scotland has been anything from one and a half times to twice the unemployment rate in the United Kingdom as a whole. I was appalled by the complacency of the Secretary of State for Scotland last night, when he seemed to suggest that an unemployment figure of 127,000 in Scotland was not too bad. He has been reminded often enough of his remark when in opposition to the then Secretary of State for Scotland, that if he were in office he would resign when unemployment in Scotland reached more than 100,000.

I remind the right hon. Gentleman that 127,762 people unemployed in Scotland represents 127,762 pieces of human misery, degradation and hopelessness. I agree entirely with what the hon. Member for Walton said about that. For the Secretary of State for Scotland to claim, as he did last night, that a reduction of a few thousand to a figure of 127,762 unemployed represented a success makes a mockery of the English language, of the right hon. Gentleman's Secretaryship, and of the system which sustains him in that office.

Unemployment, as the Toothill Report said in a blinding statement of the obvious, is usually related to the industrial structure. That is worth underlining. I restate what the centralisation report by the Scottish Council in 1969 said about the shakiness of Scotland's industrial structure. It said:
Thirty years ago, the great problem for Scotland was what to do to counter the head-long rush of industry to places like the Great Western Avenue in London, in order to retain and create more employment in Scotland. To a large extent we have succeeded in changing the environment so that production in Scotland has grown steadily. But now we are faced with a different situation, for which quite different solutions will have to be thought out and applied. The question now is how to stem the stampede of the decision-making centres of industry, of its heads of design and of finance to the south.
Sir Leon Bagrit, in his 1964 Reith Lecture, amplified that when he said:
it is morally wrong and socially absurd to condemn the North to an existence outside the main stream of industrial change and progress, permanently regarded as old and poleterian, while the South becomes new and middle-class.1453
Nothing has been done since Sir Leon said that, or since the Scottish Council report of 1969. It is because we do not have the centre of decision-making in Scotland that we suffer from such dreadful unemployment today.

We have to welcome the Chancellor's measures as far as they go, but they are only palliatives or, as my hon. Friend the Member for Aberdeenshire, East said, only cosmetics which are too little too late. They will do nothing to cure the problem of Scotland's economy, a problem which is structural in nature. I have one or two suggestions for the Secretary of State. The Scottish Development Agency should be given an annual budget of £300 million rather than £300 million over an indefinite period, as has been suggested. This sum should be free from the stranglehold of "Big Brother" in the shape of the National Enterprise Board.

There should be a mixed State-private industry venture capital fund—an offshoot of the Scottish Development Agency—which would invest risk capital in small businesses, in entrepreneurs who could create in Scotland the industries of the future controlled in, by, and for Scotland. These industries would provide long-term jobs for Scotland. The Scottish Development Agency should have offices in the major industrial centres of the world to attract industry to Scotland and also to act as a vehicle for the passing on of technological information to indigenous industries in Scotland.

The most important thing is that the Scottish Assembly must have total control over trade and industry in Scotland. There is no other way. Nothing less will enable us to begin dealing with the awful unemployment which the Union of Parliaments has bequeathed to us over many years. It is a physical, logical and economic impossibility for us in Scot-land to make a bigger mess of our economy than this place is already doing.

We could not do any worse and I think we could do better. I am sorry that the hon. Member for Edinburgh, North (Mr. Fletcher) does not have my faith in Scotland and the Scottish people. The Daily Mail points out today that the one thing which unites Tory and Labour Members in this House
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—apart from the subject of salaries—is when an SNP Member is on his or her feet.

The Chancellor said that there was no scope for cutting down on unemployment because of inflation and balance of payments problems. Scotland has no balance of payments problems. We stand on the threshold of great potential. We need reflation, not just to deal with unemployment, but for social services.

My hon. Friend the Member for Aberdeenshire, East never tires of pointing out that out of the 121 worst areas of social deprivation in the United Kingdom there are 115 in the West of Scotland. Since the Chancellor has not even begun to reflate the Scottish economy, we shall be voting against the Government tonight. This will not be a vote for the Conservatives; it will be a vote against a London Government and a centralised system which sees the United Kingdom as a monolithic, unitary economic system.

The hon. Member for Walton said that the problem could be solved only centrally. We totally disagree with that. Tonight we shall be reflecting the wishes of the Scottish people as shown in recent regional elections and by a recent opinion poll, which showed that the Scottish National Party was the largest single party in Scotland. A self-governing Scotland would never tolerate an unemployment level of 127,000.

The speech of the hon. Member for Perth and East Perthshire (Mr. Crawford) had the defect of all the speeches I have heard so far from the Government side in this debate. There has been in them a concentration upon the evils which beset our industrial society in terms of unemployment, but very little time has been spent upon the causes or the cures. Whatever may be the rights and wrongs of separate, devolved government or integration with England, it is incumbent upon the hon. Member for Perth and East Perthshire to say what he would do with his devolved government which would be likely to cure unemployment in Scotland.

Up to the last three or four years, the right level of unemployment, the maximum consistent with no overheating, was obtained by proper budgetary policies,
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by avoiding surpluses or deficits of any great scale, and hitherto the economy responded fairly well. But recently we have faced a new phenomenon—that although we have an enormous deficit, we are getting much higher levels of unemployment than we should have expected to see with such a deficit.

The decline in our industrial sector is very rapid and it is accelerating. Unless it is arrested and turned round, we shall have enormously severe problems of industrial unemployment, whatever the level of demand we dare to go for. Simply to go on pumping money that we have not got into industry will not meet the scale of the problem facing us, because we face some sort of industrial collapse. We must look more carefully at the causes and cures of our problems.

There are two lessons to be learned from that shabby day yesterday when the Government came clean on Chrysler. It cannot be right, as hon. Members on both sides have said, to make an agreement whereby our scarce resources for industrial investment can find their way by transfer payments straight through to Detroit shareholders. The Government were hijacked by Mr. Riccardo. They got him in the "Spaghetti House", but Mr. Riccardo managed to get away with more than others who try to do that in real life.

The Government have been taken for a ride with British taxpayers' money. It is a scandalous waste of money. The Chancellor of the Duchy of Lancaster is alleged to have been the architect of this crazy scheme. We hear of dissension in the Government and rows in the Cabinet, but the right hon. Gentleman should be called to account for his part in this. There is a maxim: "Give me a fulcrum and I can shift the world"; give me a Lever and I can fix anything.

The right hon. Gentleman can make a bargain of this sort because he seems to the outside public to carry the confidence of the City, the confidence of industry and the confidence of the Tories. He is allowed to get away with murder on those flimsy and mistaken grounds. If anything should come out of the Chrysler affair, it is that "Mr. Fix-It—I-can-get-on-with-the-City" is exposed by the denunciation of the lousy deal that the Government have done.

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The second point is that unless one has the cars, one can never export them nor save imports, and the Chancellor of the Exchequer confirmed this today. He said he did not want to put import controls on cars because we had not got the cars with which to replace imports or to export—supposing we could find the markets—and he went through lists of waiting periods. There are no spares for British Rail engines and wagons, and the truth is that we are not producing the goods. We are not producing motor cars, engineering equipment, coal, or steel, on anything like the scale that would enable us to deal with our economic problems. One has to put the two things together: we are not producing; we are failing to provide the jobs as a result, and our industrial sector is declining. What is the cause of this?

The hon. Member for Liverpool, Walton (Mr. Heffer) made one of his best speeches he always does best when he is overflowing with emotion. He seemed to assume that it must be capitalism that was the cause of all the problems, but the evidence is the other way. The evidence is that we have ever greater degrees of Socialist Governments—and I include in that the last Conservative Government. They have tightened the controls and tightened the screws on business, tightened taxation and have made it their business to discourage and put off those who would invest and man-age industry to the point where industrial investors and managers are reaching something like despair.

I do not believe that the solution to these problems lies along the lines which the present Government have staked out—the social contract. long since for-gotten, and an element of worker participation. I do not believe that any Labour Member in his heart of hearts believes that passing a law which puts a certain number of workers on the board, or improving communication within industry or enabling workers to influence decisions, will arrest the decline in British industry.

Nor do I think that the activities of the Secretary of State for Employment have been anything but counter-produtive. His unfair dismissals legislation, his closed shop legislation, his projected dock labour Bill, can only make restrictive practices more hallowed and more
1457
hardened. They are all counter-productive because we face the great dilemma that if we are to have an industrial sector which is to be competitive and stand on its own in world markets, exporting because it is producing a lot, cheaply and well, we must have less over-manning, fewer restrictive practices, more productivity and more labour mobility.

All these things are at the very heart of the success of our competitors When we read that our motor car production is only half what it should be, we should conclude that we must do something to encourage it. But the dilemma is that we have this high rate of unemployment, and if we were to succeed in tackling overmanning and restrictive practices and the rest, we should undoubtedly increase unemployment further.

Speeches like those of the hon. Member for Walton and the hon. Member for Perth and East Perthshire make unemployment seem to be the greatest peril that we face. They harden in men's minds the need for restrictive devices and practices to prolong employment, but it is employment which is worthless. It is the pressure for import controls and for bogus job creation where the job is not really lasting which encourages the attitude that people can look to palliatives and expedients rather than face reality in the industrial situation.

The Government could have given a lead. They could have at least condemned restrictive practices and over-manning. They could have advised people that it was not in their long-term interests to cling to jobs that were no longer necessary. Instead, they have hallowed these bad ideas—and the Secretary of State for Employment is very guilty of that—by trying to stratify the employment structure and prevent industrial change. The right hon. Gentleman's short-term compassion has led him into a position of long-term oppression which is going to do great harm.

The Chancellor of the Exchequer could have said "I have listened to the people who have tried to invest in British industry and to manage it at all levels". It is easy enough to find out what they are saying, to find out why industry is declining. They are saying "We are knocked for six by endless tax changes, endless regulations and changes in those regulations; we have to employ more and more
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people to deal with taxation, the Sex Discrimination Act, the Equal Pay Act, the Community Relations Act, training regulations, redundancy regulations, and so on." In other words, they are having to deal with all the nonsense of Socialism. They say "We cannot find time to man-age the business by the time we have coped with all these things."

All this is at the heart of the decline of British industry. In the final analysis, it comes down to people. The difficulty about a Labour Government is that in their thinking they divide the supply of a product from its construction. They are inclined to say that they can bash the dairy farmer as hard as they like, but that there must be more milk because it is valuable to health and children's teeth. Then, of course, they get into trouble because unless one sees about supply, demand cannot be met.

When one comes to consider the reasons for the decline of British industry, one realises that it is because those who are expected to take the risks, who are expected to make the investments, who are expected to manage in difficult circum-stances, who are expected to exploit extremely expensive capital equipment, have been told that they are not welcome in our society and are not to be encouraged. They are the people who are now packing their bags to go overseas. They cannot make money here, and they want to make money and do not just want a salary. We have penal rates of taxa-tion—the capital transfer tax, the wealth tax, and the whole kitchen sink of taxa-tion—all thrown at these people by the Labour Party. No wonder we do not get the investment we need and higher industrial production. Instead, we get decline.

It is ever-greater degrees of Socialism which are destroying British industry. It is not a failure of capitalism, but a failure of Socialism's frowsty 19th century theories about how one can make productions without bothering to motivate people. The question of whether Scotland would be better off separated or integrated is futile.

The question that the hon. Member for Perth and East Perthshire should be answering is how he would generate wealth in Scotland. But he has never answered it. All he utters is the parrot cry that Scotland is a nation. That is
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no answer to Scotland's problems. He has a duty to tell us what he would do. Investment in industry is declining because every policy pursued by the Government is counter-productive to the aims they are trying to achieve.

Some 24,000 men in the North-West of England have been completely unemployed for more than a year. That figure represents 20 per cent. of the total number of long-term unemployment in the country. To those who are prepared and prefer to work, unemployment is frightening and demoralising. My hon. Friend the Member for Liverpool, Walton (Mr. Heffer) knows that. He has experienced it.

I was a schoolboy in the 1930s in a family of six children. My father was a joiner in the building industry. I can remember him on a bicycle chasing a lorryload of timber and desperately hoping that he would catch it and that there might be a job at the end of the journey. That is the sort of indignity to which ordinary decent people were ex-posed. I can still taste the flavour of it, and I shall never forgive it or forget the people that were exposed to it.

I therefore welcome the measures, in-adequate as they are, that the Government have announced, such as the plan to stock steel and to restrict certain imports. They warrant some appreciation. I think that it is perhaps too little and a little late, but the package demonstrates that the Government are prepared to recognise that they could be wrong. They are prepared to alter course if the evidence justifies it.

People quote Aneurin Bevan these days although they paid very little attention to his guidance when he was alive, but he said once that to impose import restrictions would be to put a wall around chaos. That remark is worth examining. Perhaps it is necessary at times to build a wall to remedy the chaos.

I hope that when the Government press ahead with import restrictions, which I favour in the immediate situation, they will take great care that manufacturers do not abuse the situation by taking ad-vantage of a soft home market, and that they will put alongside the restrictions
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penalties and measures to protect the public. We should congratulate those hon. Members who have fought the long and grinding battle to establish a system of import controls. All we have done to date is force the door open. The crusade is by no means finished.

I think that most hon. Members look forward to the day when we can abandon all defence spending. I concede that there are differences of opinion about the climate and the conditions that will be necessary for that highly desirable end, but it seems that we are moving towards genuine defence expenditure cuts. I honestly believe that there is room for savings in that area of expenditure. How-ever, it would be unforgivable if we stumbled forwards without adequate preparation. The substantial workforce in the defence industry is entitled to be in-formed and consulted. A planned programme should take place so that people now employed in a rather ludicrous occupation can be guaranteed full and gainful alternative employment—[Interruption.] I shall give way if the hon. Member for Plymouth, Sutton (Mr. Clark) wishes to intervene.

As I have been challenged by the hon. Gentleman, I am most grateful to him for allowing me the opportunity to intervene. Does he agree that the defence industry plays a vital part in Britain's security and that in the present international climate it is one of the very few industries in which a growth element is discernible?

There might well be a growth element, but that is not necessarily an encouraging situation. It seems that some people are prepared to continue to take account of defence expenditure by other countries until the whole of the nation's income is absorbed by defence spending. I reject that philosophy.

In my constituency there is a substantial RAF complex and many of my constituents work for the British Aircraft Corporation. Others of my constituents work at Gloucester on guided weapons. I see no reason for any loss of employment or loss of income among those people if their employment is switched from defence to alternative employment. There need be no loss if there is advanced planning and a conversion programme.

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It is apparent that wherever possible we should encourage the production of commodities that are socially valuable to our society. There should be no lack of finance and no lack of employment merely because it is decided that less money should be spent on weapons of destruction and that more money should be spent on more useful purposes. We should be able to research the market so that the products that are produced are the pro-ducts that are in demand.

I am sure that the people now employed in the defence industry would prefer to be employed in a more useful occupation. Given the choice of queuing up for unemployment pay or producing weapons of war, I accept that the people employed in the defence industry would prefer to produce weapons of war. In this context I suggest that to use the phrase "weapons of defence" is to employ a euphemism. To say that we cannot ease individual Members' consciences or the economic crisis by risking the well-being of the workers employed in the defence industry is to offer a bogus option. None the less, a carpenter, given hammer, nails and other necessary tools and planned opportunities, can make either a coffin or a table, with little trouble in the change. I suggest that that applies to most of those who are employed in the defence industry. They are mostly highly skilled people who would provide a heartening influx of ability into useful production.

There are tremendous possibilities following the diversification of military spending. For example, short-take-off-and-landing passenger and freight aircraft have not been utilised or given an application in the civilian market. The adaptation of gas turbine engines for use in ships is a process already under way in Japan. That is a country that spends less than 1 per cent. of its gross national product on defence. I could give a long list of examples, but I shall not linger on the one topic. There is a substantial list of projects that could be undertaken if the work force and the expenditure that is now devoted to the armaments industry were made available for civilian production.

Does the hon. Gentleman consider that the Harrier and the maritime Harrier project are useful to this country? Does
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he consider that those projects have a useful export potential? Would he sup-port the sale of Harrier aircraft to China if the Chinese Government wished to purchase them?

The hon. Gentleman misinterprets my purpose. I do not say that there should be a sudden switch from spending on weapons of war. I am saying that we should recognise the situation in advance and that we should not cut back on defence spending without making provision for alternative useful employment.

In common with most of my hon. Friends, I have great respect and affection for the Ministers who serve the Department of Employment, but it seems that they are largely engaged on meeting day-to-day crises. God knows that there are sufficient to keep them fully occupied. I have mentioned the immediate issue of import control and of defence spending, but I conclude my remarks by referring to the necessity for a long-term strategy. I speak of the employment and economic situation generally.

It is generally agreed that much of our economic misery arises because there has been an insufficient level of investment in industry. Various explanations are offered. Some of us believe that the lack of investment has arisen because the Government have not harnessed and directed investment. Others believe that the rewards are scanty for those who invest privately. It has always seemed strange, if investment is the key to our future prosperity, that we should leave the matter in the hands of managers of investment funds, whose only motive seems to be a quick return on whatever form of investment is being handled. If war is too important to be left to the generals, I suggest that our future prosperity is too important to be left to investment fund managers. It is a curious system and I should prefer some national control over investment.

We all recognise the desperate need for intelligent investment in industry. We can argue afterwards about the distribution of the wealth that is created. I have firm opinions on that score. All too frequently we go wrong in assuming that a greater investment in industry will lead to a greater amount of employment in manufacturing industry. I believe that
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the reverse is true. The greater the investment in industry, the smaller will be the ultimate labour force. All the evidence demonstrates that that is so. Between 1964 and 1973 our gross national product rose by 27 per cent., but the labour force reduced by 5.5 per cent. There have been remarkable examples of movement away from labour dependency. The gas, electricity and water industries increased output over the same period by over 57 per cent. with a labour force reduced by over 16 per cent. In the same period the output achieved by the engineering industry increased by 46 per cent. whilst employment in that sector fell by 13.2 per cent.

The coal, petroleum and chemical industries recorded a massive increase in output over the same nine years of 71.5 per cent. whilst their labour forces were reduced by 8.5 per cent. The textile industry achieved an increased output of 30 per cent. and there was a 29 per cent. reduction of the work force. The list is endless. The fact is that all industries are moving continually towards capital-intensive structures. The pace will continue to accelerate. It may be that the long-awaited upturn in the economy will brieflly absorb a greater number of workers, but it will be a passing phase and will not disturb the inevitable end.

We should welcome this development. Indeed, I would press for a higher level of investment. It is on the wealth that is generated by industry that all else depends. I think that most of us recognise that the old concept of full employment is now obsolete. We should plan to meet changed conditions. We should examine the options that are now becoming available.

I have never believed that work in itself is virtuous. In fact, it is often downright drudgery. A surprising number of people in possession of great private wealth neither toil nor spin, nor do they seem unduly depressed or embarrassed by their idleness. What is bitterly resented by ordinary working people is the stigma, the indignity and the poverty that is usually associated with enforced unemployment.

We should look at the new situations that are developing from a new angle. We should talk of a shorter working day and
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a shorter working life, of a sabbatical year for working people and of wider opportunities for education and travel. We should plan now to accommodate more people in the public services—in public transport, the hospital services and the social services. This is where there is still a labour end of the market, which is important.

If we move forward to this situation and recognise the change of relationship between labour and capital, it must be turned to our advantage. Unless we are prepared to re-examine the position, there will be chaos and misery. It is not generally recognised that by the year 1985 there will be nearly 2 million more people between the ages of 16 and 65. If we think that we shall be able to accommodate them in industry, we are misleading ourselves.

I have long believed that capital is the servant of labour rather than labour being the servant of capital. If we have the will, we can build on this situation and create a better tomorrow. I hope very much that my collagues in the Department are working on this situation and creating this foundation.

There has been ample evidence in this debate that economics is still not an exact science. In their discussion of the relationship between unemployment and inflation, some hon. Members have said that unemployment is the result of inflation, others have said—possibly, in some measure, this applies to the Chancellor of the Exchequer—that unemployment is the cure for inflation, and others have said that unemployment is the cause of inflation.

I believe profoundly that unemployment is highly inflationary. It must be inflationary to pay people for doing nothing. The money that is used to pay them must be drawn from taxation and that taxation is itself drawn from the remaining and contracting prosperous sector of the economy.

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But if there is one factor more inflationary than paying people for doing nothing it is paying people for making products for which there is no demand, because they are being paid for utilising their skills and labour to consume resources and materials which often are purchased with foreign exchange and taken out of the general level of productivity, after which it is found that there is no demand for the goods that they produce.

It seems to me that this is the interesting and ominous new element which has entered the present phase of Government behaviour—it hardly merits the description "policy". They have found themselves arriving precipitately in the consumer end of the economy. They are now dabbling in that sector of industry, where they are at the mercy of individual demand. They are at the mercy of those many millions of particles in the overall element of consumer demand which finally coalesce and form the basis on which a product is either received or rejected.

The trail of events that led from the Government's first intrusion on the balance of the motor cycle industry, through British Leyland, and now to the enormity and idiocy of their intervention in the Chrysler situation, is all too easy to discern.

The very excuse that the Government use and that many of their supporters flaunt to justify going into the Lobby to support a proposal that they know in their hearts to be unsound is that it is saving jobs. I suggest that that is a travesty of the word "saving". Although they may briefly, in some instances—for those who will not progressively be made redundant—be buying time, they cannot be said to be saving jobs in the sense that job security is understood in the Civil Service, for example. The job-saving argument is not a valid one unless it is allied to some kind of strategic thinking affecting the whole economy, and there is no sign of that.

This is the strange paradox about the Government's current behaviour. It is neither capitalist—for the element of basic prudence and husbandry are absent; by capitalist standards, the Government are indulging in criminal overtrading—nor is it Socialist, because there are not
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even the most elementary safeguards or back-up planning discernible in any of their current decisions.

The first consideration that we would expect the Government to make, if they were planning as responsible Socialists, would be to take care of the balance of payments. Yesterday, I asked the Secretary of State for Industry about one element of this after his statement about Chrysler. He did not deny the figures that I quoted to him, which showed that the overall result of the provisions that he had made for Chrysler, in terms of the balance of payments, would be equivalent to buying dollars at the rate of 1.30 to the pound, which cannot conceivably be thought prudent or anything but, in the very shortest term, disastrous. The only answer that the right hon. Gentleman could make was some rather muddled generality that there might be some balance of payments saving by the negative fact that if Chrysler cars went on being turned out they would fill a gap which might otherwise be filled by foreign cars. The claim that the whole gap left by Chrysler cars would be filled by foreign cars is palpably false. I may touch on the fact that the right hon. Gentleman is doing great harm to British Leyland, because presumably some proportion would be filled by British Leyland, Fords, or other cars produced in this country.

I take this argument one stage further, because the Government's thinking and calculations on the balance of payments side of this operation are so faulty that they should be expounded at slightly greater length. I speak of the Government's "calculations", but I have no reason to believe that there have been any calculations, because there is no evidence that the Government have devoted any thinking to this aspect of the problem in their panic rush to—as they say—save jobs.

If, on the credit side in the Chrysler operation, we put the Iranian order, which is the only firm order contracted for, we may generously allow a nominal figure of £100 million. If we add to that, putatively, some export order representing one-third of the value of the Iranian order, it represents another £33 million. Again, giving the Government the benefit of the doubt, if we allow for
1467
one-third of the gap which would have been left were Chrysler cars to cease being produced, on the 1974 figure, of 270,000 cars, it represents putative sales of 90,000. At an average profit level of £200 per car, wholesale, we get another figure of £10 million. Therefore, on the most generous assessment, there is a net saving of £143 million on foreign currency, for which the taxpayer is being asked to put up £162 million. In fact, the taxpayer is buying dollars—the universal medium of foreign exchange at present—at a rate of slightly less than £1 for one dollar.

However, the situation is even worse than that. On top of that there is a debit column, which includes, first, the cost of the Simca kits which we are told are being made in Paris and imported for assembly at Ryton.

Secondly, the debit column includes the various remittances, over which no control has been postulated, to the parent company in America. I think we can safely assume that there will not be a nil level of remittance. Therefore, whatever it is must go into the debit column.

Thirdly, there is the element of profit washing which has been established as a practice by this company. The right hon. Member for Lanark (Mrs. Hart) drew attention to that matter last night, and it was highlighted in the shop stewards' committee's report. I believe that is a flagrant, though circumnavigational, breach of British exchange controls.

If we add those three debit elements to the figures that I hope I have already demonstrated to the satisfaction of the House, we get an exchange rate of less than £1 for one dollar on the original quotation. Therefore, on this operation alone there is a clear net deficit on foreign exchange account.

That is just one element of the negligent planning—indeed, total absence of planning—that the Government seem to be applying to their curious profligate and ill-considered intervention in the consumer end of the industry. Any capitalist who conducted his affairs in that manner would find his bankers withdrawing their support overnight.

It is not Socialism, either. It is easy to formulate a Socialist solution to the problems of the motor industry. Many
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hon. Gentlemen know that it carries certain concomitants—control over imports and suppression of individual choice—because people must be forced to buy the products that we are making, or we must make it impossible for them to buy anything else. That is the current practice used in Iron Curtain countries for solving these problems.

This solution is neither capitalist nor Socialist; it is simply the solution put forward by some crazy, profligate spendthrift who tries to buy off trouble from whatever quarter without any thought for the future.

I do not think that there is any hon. Member who, in his heart, does not realise that all this money—all the money that is going to British Leyland, all the money that has already gone to Norton Villiers Triumph, and all the money that is being sploshed into the consumer industry—will go down the plug and that in four or five years, or possibly only three years, the situation in both the industry and the country will be immeasurably worse.

Only yesterday I received a delegation from the Plymouth branches of ASLEF and the AUEW concerning the threatened railway cuts. I had to explain that one of this country's essential services may be curtailed for lack of funds at the same time as enormous amounts of public money were being channelled into ill-conceived commercial participation in the production of consumer goods.

The word "monetarism" has acquired a pejorative identity. I suspect that many hon. Members who scorn its doctrines have not inquired too closely into its meaning. The principle argument against monetarism has never been that it was dishonest, that it was based on false premises, or that it was inappropriate to our economic circumstances. It has always been—I recall this was the argument two years ago—that it would create 1 million unemployed. We were told "Watch out. You will have 1 million unemployed." But, under the existing amalgam of cowardice and expedience, we have 1¼ million unemployed. By some accounts, we may have I¾ million unemployed.

This policy will double or even treble danger. It is highly inflationary and totally divisive. All hon. Members know from experience with constituents, the level of personal privation and indignity
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that it causes. It is also, without any attempt to cure our fundamental ailments, an ominous indicator to our vulnerability to foreign competitors who are now beginning to emerge from their problems, having had the courage to tackle them with measures from which this Government still shrink.

Unemployment in this country has arisen not from the ruthless application of monetarist policies, or even from the doctrinaire tenets of Socialism; it has arisen from the fatal combination of incompetence and electoral expediency—a clumsy mixture of outdated Keynesian dogma and fiscal panic, of which the Chrysler incident is the latest but, regrettably, not the last, example.

This debate is a sad coda to the debate yesterday on the Chrysler situation. I share the views which have been expressed from both sides of the House on the disappointment and concern that is felt about the package deal which has been presented and its effect on many parts of the country.

Yesterday the Secretary of State for Industry said that unemployment would fall most heavily in the Midlands. My constituency is in an area where unemployment has risen considerably in the last year or so. Fortunately, we have more diversification than Linwood. Wolverhampton was an important railway town at one time. It is not any more. We have the derelict railway workshops as a perpetual reminder of former days of the glory of the railways. Railway workers in my constituency are concerned about the rumours of cuts in the railway system, to which the hon. Member for Plymouth, Sutton (Mr. Clark) referred: they will create even greater unemployment in Wolverhampton. However, for the time being we are more concerned with the effect of the Chrysler situation.

In Wolverhampton, 6½ per cent. of the adult working population are unemployed, but I am concerned about the effect of unemployment on young people. In my area there are 744 young people unemployed, almost 500 of whom left school last Easter and in the summer and
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have not yet had jobs. Only 127 young people—mostly girls, because there are very few jobs available for boys; most jobs are for girls in unskilled factory work—have had any advantage from the employment premium, which, I understand, is to be ended in February. I should like to know what is to happen to the young people's employment premium. It is a matter of great concern in Wolverhampton, because almost 500 youngsters have had no work for nine months.

The jobs being provided for these 127 young people are eating into the jobs which should be available for the school leavers next Easter. Within six months we shall be having the summer school leavers again. There is a cycle of unemployment and lack of activity among young people and it is a matter of very great concern. They are imbibing unsatisfactory habits. They are not getting the opportunity to work, but they want to be independent, have a job and earn money.

I raised the question of Norton Villiers Triumph factory in my constituency with my right hon. Friend the Secretary of State for Industry and, quite unjustifiably, got a very dusty answer yesterday. He chided me for not being here for the debate on the Summer Adjournment on 7th August when an hon. Member opposite initiated a debate on the motor cycle industry. But I could not possibly have been here; 1 was in Mexico at the time. I hope my right hon. Friend will not chide me like that again.

We are prepared to pay out enormous sums of money to prop up a lame American multinational duck which is producing cars that nobody wants to buy. We are encouraging it in that. The motor industry is contracting all over the world because of various influences affecting cars, not least the scarcity and cost of oil. The NVT motor cycle and industrial engine factory in Wolverhampton has been unoccupied since July. That is a long time for the workers to maintain their resolve that they want to take over the factory and produce their new engine, the Wolf, which is to be a competitor to Japanese machines. They are confident they can export it; they have agents here and abroad willing and anxious to handle it. The workers also want to continue with their industrial engine which could
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bring great benefits to developing and agricultural nations.

They have asked for only £7 million and 1,600 jobs are involved. The Government will not give that small amount, yet they will provide large sums to buy time for Chrysler. The shop stewards and the action committee from NVT have been anxious to meet the Secretary of State for Industry to demonstrate how unemployment in Wolverhampton could be reduced for this small amount of money, but they have been unsuccessful. There was a meeting with the Under-Secretary on 3rd December when they presented their audited, costed, cast-iron scheme. The very next day my hon. Friend the Member for Wolverhampton, South-East (Mr. Edwards) received a letter—before those proposals could possibly have been considered by anybody in the Department—saying that the Government were not prepared to put £7 million into this factory.

There have been all sorts of curious rumours in the Press this week that money was to be found by the Government and Barclays Bank to support the NVT factory at Small Heath, but it was the management of this factory which caused all NVT's problems in the first instance. I wish I could persuade my right hon. Friend who is to reply to this debate that there will be some help for Wolverhampton with this small outlay.

There has also been disturbing news that American multinational companies are to reduce their investment in Europe as a whole. This could mean further increases in unemployment and further contractions in employment in Britain and the rest of the Common Market countries. Mr. Thompson, the President of the Goodyear Tyre and Rubber Company, who used to be managing director of the Goodyear factory which employs nearly 3,000 people in my constituency, said recently that the company's foreign income had dropped 29 per cent. in the first six months of this year. He said that among the main causes were strikes in Great Britain, the main base of the European operations of the company at present. He also said there were many labour troubles in other parts of Europe and that a good deal of Goodyear's capacity was lying idle in Europe because of the European oil shortage and currency
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changes which had increased the cost of making tyres. The company is to concentrate its investment in Asia, Africa and Latin America. This is a disturbing warning to us and a worrying indication for Europe as a whole. We may face very considerable difficulties if Goodyear, which is the largest employer in my constituency, contracts its activities in Europe any further.

Perhaps my hon. Friend will indicate how it is a Right-wing speech. I am quoting details of a firm with many factories in Europe. If it does as it is suggesting, we shall be in difficulties.

Are the Government going to do anything to plan employment in this country on a long-term basis? What help are we to get out of this disastrous situation? Are we to sit back and wait for more foreign companies to come with their begging bowls threatening to withdraw unless we give them money? These problems which overshadow the whole country are matters of the most serious concern.

I hope the hon. Member for Wolverhampton, North-East (Mrs. Short) will forgive me if I do not follow her on some of the points of local application to her constituency, though I hope that what I have to say will have a bearing on the problem of school leavers to which she referred and that if she agrees with me she will give me her support.

With unemployment at present levels the situation cries out for bold action, though it must be well judged. Without bold action we shall see 1¼ million unemployed early next year, and the figure will probably reach 1½ million in the course of the year. Surely hon. Members of the Labour Party find these figures and this prospect intolerable and totally unacceptable? I think the Secretary of State for Employment indicated as much in the course of an earlier speech.

I shall try to be constructive and brief. The measures announced today will
1473
achieve no substantial reduction in unemployment. There is only one step which the Government are in a position to take and which could make a real impact on unemployment. There has been no mention of it so far in the debate and surprisingly little discussion about it inside or outside the House. We could, at little cost to the Exchequer and with no damage to the country's economic position, reduce by several hundred thousand the number who would otherwise be unemployed. The way to do it is to lower, temporarily, the qualifying age for national insurance retirement pensions for men. I recognise that temporary reduction in the qualifying age would not produce more jobs, but it would substitute voluntary retirement for involuntary, deeply-resented unemployment. It would be achieved by the voluntary withdrawal from employment of those who had already largely prepared themselves mentally, domestically and financially for retirement. It would create job vacancies for the younger men who are anxious to find work.

According to the Department of Health and Social Security at present four out of five men claim retirement pension within a year of reaching their sixty-fifth birthday. This indicates a substantial wish to retire at the first opportunity. My industrial experience, which has included matters of human relationships and personal preference, leads me to believe that it is not generally realised for how many people retirement is an eagerly awaited release from a work routine and daily timetable that is becoming increasingly burdensome to them. That is not the case with everyone, but it applies to a substantial number.

There are about 270,000 employed insured men aged 64 and well over 500,000 aged 63 and 64. I suggest that about a half of them might take immediate advantage of the temporary reduction in the qualifying age. For some there would be the problem that their occupational pension would not be payable until 65, and that would be a deterrent to retirement. I believe from a close association with a major occupational pension fund that many employers, although not all, particularly the larger ones, would be prepared to make temporary arrangements to pay the full pension one or two years
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earlier if the Government gave them a lead and if adjustments were made to the Inland Revenue code covering occupational pension schemes.

I recognise that all vacancies created might not be immediately filled, and to that extent the cost to the National Insurance Fund of the additional retirement pensions would not be balanced by a reduction in the payment of unemployment benefits. However, after the period of rundown in the economy, the delay before vacancies would be filled might be shorter than would at first be supposed. Answers to Questions I have put to the Secretary of State for Social Services suggest that the cost of unemployment benefit, when earnings-related benefit and supplementary allowances are taken into account, exceeds the cost of the retirement pension—probably substantially. My point is that, of male pensioners aged between 65 and 69—the nearest one can get to the 63 to 64 age group—only one in six receives supplementary pension, whereas of the unemployed men receiving benefit—there are 900,000 such people—two out of three receive supplementary allowance.

To contain unemployment in this way would involve no risk to the economy, no switching of resources into candy floss activities, and no undermining of the ability to take full advantage of export opportunities. There would be no sudden sucking in of imports, no added burden on the trade balance, such as would follow the stimulation of home demand on the scale needed to bring about a comparable rapid creation of additional jobs. What worries me is that if the Government do not act in the way I have suggested, a method which will do no damage, they will be panicked by the figures next year into taking action that will be damaging to the economy and will cause distortion.

We have considered variations of this proposal most seriously, but our estimates of the cost are very different from the estimates produced by the hon. Member, and that is for a variety of reasons. I can promise him a full reply to the suggestions he is making and an explanation of the consideration we have given to the matter.

I thank the Secretary of State. What he has said amounts to an invitation to curtail what was already intended to be a brief speech.

I have, however, further comment to make along the lines of the speech by my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley). I believe that action on the lines I have suggested would ease progress towards an early and vigorous start on tackling overmanning in both the private and public sectors. The Prime Minister keeps repeating that this is not the time to tackle overmanning, yet if we postpone action we are cutting down the survival prospects of many firms and delaying further the return to national prosperity.

Perhaps at the back of the Secretary of State's mind is the thought that if the qualifying age were reduced it might be difficult to revert to a retirement age of 65. We certainly could not, with our economic prospects, afford a permanent reduction. However, I believe that we live in an intelligent democracy. I am sure the Secretary of State agrees with me. We probably both despair of that fact at times. Usually when he thinks democracy is being most wise I think it is being most prudish, and vice versa. I believe that people appreciate that in our critical situation exceptional measures are needed. This is all a question of presentation. It would be possible to return to a retirement age of 65 provided all uncertainty about that were eliminated from the start. That could be done by announcing, for example, that men born, say, in 1912 could retire at the age of 64, and those born in 1913 at the age of 63. That would avoid any reference to a lowering of the qualifying age. By how much the pensionable age should be lowered and for what age groups could be determined in the light of the Treasury's assessment of the timing and place of the hoped for upturn in the economy.

Today the Chancellor of the Exchequer used a sentence that actually described what I have been proposing. He said of another measure, which, I believe, will be far less effective than what I am suggesting, that it would be no substitute for economic recovery but that it was designed to blunt the effect of the recession. I am not suggesting that what I am proposing would have anything
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more than a marginal effect on the economic strength of the country, but it would softten the impact of the recession, and it might save the Government from taking some very harmful steps under pressure of public opinion in the next 12 months.

The hon. Member for Morecambe and Lonsdale (Mr. Hall-Davis) delivered his speech in his usual constructive manner, but I wish to refer to the speech by the hon. Member for Cirencester and Tewkesbury (Mr. Ridley), who put the country in his debt for reminding us that the shadow of Selsdon Man still looms large on the Conservative Benches.

I give a qualified welcome to the announcement by the Chancellor today of measures seeking to provide some degree of control over imports of textiles, particularly made-up woollen goods coming into this country from State-trading nations. My hon. Friends and I with wool textile interests have been lobbying on this point for a long time, and I am glad that at last the Government seem to have taken some notice of our representations.

The measures appear at first sight to be less radical than we or the industry desired. However, we shall study them carefully and do our best to estimate their probable effect on the industry. I wish to emphasise that the figures used to calculate quotas should not be based on imports in recent years because in the past two or three years imports have increased steeply. I suggest that the calculation should be made over a considerable period, probably up to 10 years.

The Government have indicated that they do not regard some industries as expendable. We were beginning to wonder. If industries are regarded as expendable—if we say that textiles and footwear must go to the developing countries and that Hong Kong, Taiwan, and Korea should be allowed to manufacture electronics—where does the process stop? No industry is expendable, particularly the wool textile industry—a constituency interest that I am proud and glad to represent.

Although we are discussing unemploy-ment, the debate is wide ranging. Some of my remarks will be more applicable
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to the Department of Trade, and I hope that my right hon. Friend will convey those remarks to that quarter.

Since 1968 the number of production personnel in the wool textile industry has declined by almost 50 per cent. On 31st December 1968, there were 109,433 production workers employed in the industry. By 31st October 1975 there were only 58,365 workers. The industry is slowly bleeding to death. Even between September and October this year there was a further decrease of 2,228 productive workers, and mills are closing almost every week.

The wool textile industry is constituted in small units which have been ineligible for many Government aids, including the Temporary Employment Subsidy Scheme, which had a lower limit of 50 workers. I am glad that the Chancellor of the Exchequer has suggested the lower figure of 25 for the job creation scheme. I admit that some money has been made available to the industry through the Wool Realisation Scheme and the Industry Act, but it has been insufficient to carry out the major re-equipment that is required and to protect workers against redundancy. I remind my right hon. Friend that 58,000 workers depend on the industry for their livelihood. I suggest that the Government should make more money available for modernisation, training and holding labour in the industry.

We need help in two directions. Young people are not coming into the industry, for obvious reasons, so new workers are not being trained to replace those who go out through natural wastage. We need some assistance with this. Secondly, when modernisation has taken place it has been accompanied by major acts of co-operation by the trade unions involved. Having agreed to modernisation and lower manning levels, the unions find that with present pay policies they do not derive, from increased productivity, the benefit of remuneration equivalent to the co operation that they have given.

I agree that during the current year no changes can be made, but I hope that my right hon. Friend will consider the representations that he will undoubtedly receive from the trade unions to recognise this difficulty and, subject to proper criteria, to agree in the next pay
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phase to allow increases above the norm for increased productivity, particularly when Government money is involved. When Government money is involved in modernisation and increasing efficiency we must ensure that that investment is used as effectively as possible. An additional bonus would be that the workers would be further encouraged to co-operate in such schemes.

Another burden on the industry is the requirement to guard carding engines. That requirement tends to reduce rather than increase productivity, which is sometimes 20 per cent. lower. The larger firms are able to qualify for a grant of 20 per cent. towards the cost of guards, but in present trading conditions approximately 85 per cent. of firms have the greatest difficulty in finding the finance for this purpose. Each guard for a carding engine costs between £2,000 and £3,000. The total estimated cost to the industry is about £7 million. Further help in this direction would greatly assist the industry, especially small firms.

I draw attention to a further threat to employment in the Bradford area. I have evidence that the State-trading countries plan to dump electric motors in this country at less than production cost. I have detailed figures to demonstrate this, and a letter is being sent to the Tariff Section of the Department of Trade detailing the evidence and the figures. The State-trading countries have already taken about 30 per cent. of the EEC market in electric motors. Mr. Georges Chavanes, the Chairman of Leroy-Somer, the largest French motor producer, and also chairman of the rotating machines section of the French equivalent of the Electrical Manufacturers Association, states that
The situation has become intolerable. The small electric motor manufacturers have already in the past year reduced by 2,000 the number of jobs, 1,000 more will go soon. Half of the 20,000 employees in this sector are on part time.
This is directly attributable to unfair trading practices by the Eastern trading bloc.

An article in the Electrical Review of 27th June indicates that the German Democratic Republic is about to make a determined drive to secure a portion of the British electric motor market. Factory managers in the State-trading countries have informed representatives of the
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British electric motor industry—not officially—that the sale price of their goods bears no relation to production costs and that pricing is a matter of Government policy. The production time for many of their goods is more than twice the production time in this country.

The Government must have regard to this threat to undermine our industry and our economy. I hope that they will take action before this situation arises. It is a question not of negotiation but of putting the bar up before more of my constituents become unemployed through unfair trading practices.

I wish to follow the remarks of my hon. Friend the Member for Chorley (Mr. Rodgers) in connection with defence. Many thousands of workers in the Bradford area and in West Yorkshire are employed in industries related to defence. I do not quarrel—nor, I suppose, do those workers—with the view that we should reduce defence expenditure to a level commensurate with our duty to NATO and the defence of the realm, but I emphasise what my hon. Friend the Member for Chorley said, namely, that any reduction in defence spending should be carefully planned so that it is not indiscriminate and does not aggravate an already difficult situation in my constituency and throughout the country.

On 16th April, in the debate following the Budget, I was chided by the hon. Member for Swansea, East (Mr. Anderson) for "scaremongering" because I forecast that unemployment in Wales was likely to reach 80,000 or 100,000. It gives me no pleasure to see that the unemployment rate today is approaching 80,000. It is a source of great sadness to me. I fear that the steps taken today are too few and I suspect that some of them are too late and will be seen in Wales as only playing with the problem. It is not that we reject them—we welcome them as far as they go—but we need much more.

It is high time that we came to grips with unemployment. As a human right, every adult in these countries should have a job and it should be the responsibility of Government to organise the community so as to provide jobs. That is not impossible. It means planning and restructuring,
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but we have a long way to go before we reach that objective.

Like the hon. Member for Liverpool, Walton (Mr. Heffer), I, too, even in my short lifetime, have seen marches by unemployed people—in the Caernarvon area in the 1950s—and it has left the same sort of mark on me. Before entering the House I was a councillor in Merthyr Tydfil. There was 55 per cent. unemployment in Merthyr before the war, and a village in the next ward, Dowlais, had 80 per cent. unemployment. Even with second-hand experience like that, one cannot help but be moved.

In Wales as a whole today there are staggering unemployment rates. In Bargoed, the rate is 11 per cent., in Blaenau Ffestiniog it is 14.3 per cent., in Caernarvon, it is 11.1 per cent., in Holyhead, it is 12.4 per cent. and in Tenby it is 15.6 per cent. In no fewer than 24 of the 44 exchange areas in Wales unemployment is over 7 per cent., and this cannot be suffered much longer.

Between 1925 and 1950, almost a million people left Wales—nearly 40 per cent. of our population. Hon. Members take us to task because we try to get more jobs for our areas, but we do so because we have suffered this history and do not want it again, because it is running our community down. If 40 per cent. of the population of these islands had emigrated all hon. Members would take the same attitude.

The hon. Member is obviously getting back at what I said about nationalists. He should also understand that people are constantly leaving areas like Merseyside. Up to 40 per cent. might have left Merseyside over the last two or three decades. So this is not a problem only for Wales and Scotland. It is a problem for English areas as well—that is my point—and nationalism does not enter into the matter.

For us nationalism does enter into the matter, to the extent that we need a system of government that will sort out our problems. No doubt the hon. Member will adhere to a system that he believes will sort out his problem. We see nationalism as the only way to sort out ours, because systems of government from this place by either party have failed abysmally over the years.

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Of course we shall fight for factories in our constituencies and in Wales. I shall fight to get them to Wales rather than Liverpool and Scotland, and the hon. Gentleman will fight for his own people. It is hypocrisy to deny it. Otherwise, why would he now be looking for an import embargo and the stopping of capital movements to other countries?

We have seen failures by the public as well as the private sector in Wales. Nationalised boards are hell-bent on shutting steel works and freight depots, running down civil aviation, chopping railway lines and closing power stations. Irreparable damage will be done to the Welsh economy until, in a Welsh parliament, we can tackle our own problems for ourselves.

Wales has the highest unemployment rates for men and women, individually and collectively, of any country or region in Great Britain. More people are unemployed in the Pontypridd area than in the whole of New Zealand. Other small self-governing countries, like Norway and Sweden, Finland and Austria, have unemployment of only 1 per cent. or 2 per cent., compared with 7 per cent. for Wales. So this is not a world-wide phenomenon: we are getting the rough end of it.

The number employed has been falling over the last decade. More recently, it has been plummeting. In 1965, 1,028,000 people were at work in Wales. In 1975, there are just 954,000–74,000 fewer. If we include notified vacancies, we see that there are 87,000 fewer jobs in Wales today than a few years ago. The number of men in employment over the same period has fallen by 115,000.

The Government's answer to the long-term problem and the short-term crisis is the same regional policy that has failed before. The only glimmer of hope in the current package is the introduction of the Welsh Development Agency-30 years after it was first promised in a Labour Party election manifesto.

The most piecemeal policy that we have today is the advance factory programme. We hear about these factories as if they were manna from Westminster, yet those built in Wales since 1964 employ only 3,900 men and 2,200 women. We need 10 times as many if we are to absorb the currently unemployed.

The other policies in the package have also failed to get to the heart of the problem.
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No Labour Government, and certainly no Conservative Government, can or will build a healthy economy in Wales. The Government have implicitly accepted this fact in the new job creation scheme. A total of £9 million will be spent to lure the 70,000-plus army of unemployed in Wales into more prosperious regions of England. This will affect the long-term future of my community. Industrial training places available in Wales have increased only from 1,884 to 3,102 between September 1973 and September 1975. That rise compares with an increase in unemployment over the same period of 42,000.

The contribution of the Government skillcentres is less than stunning—just an extra 139 places in two years. On 2nd December in a Written Answer to the right hon. Member for Anglesey (Mr. Hughes), we were told that the Training Services Agency had recently concluded a review of the training needs in my area of Gwynedd and rejected the establishment of a skillcentre there.

The employment picture for young people is particularly depressing. There are more than 5,000 unemployed school-leavers under 18 in Wales and only 896 vacancies at career offices. That means that five young people are chasing each job, yet in Great Britain as a whole the ratio is two and a half for every registered vacancy—[Interruption.] I should be grateful if the hon. Member for Walton would give me the same courtesy of silence as I gave him earlier in the debate.

Another step which is needed concerns the temporary employment subsidy, which should be extended to local authorities. Local authority redundancies of road workmen in my area have caused considerable suffering. In an area so dependent on local authority work this can be very significant. The level of the subsidy should also be brought up to the unemployment benefit level.

So a number of steps are necessary. One which should be considered as a matter of urgency is an examination of how the grant system has worked for the last 10 years. Of the 500 manufacturing establishments coming to Wales between 1966 and 1974. 75 have closed, and many people suspect that there are factories which come to Wales to get the cash and
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leave soon afterwards. There are one or two examples of that that I could give to the appropriate Minister.

There is also the matter of an 11-point programme suggested by the Wales TUC at a meeting held 10 Downing Street on 10th October. Of that 11-point plan only one point, which has been touched on today—namely, that related to the textile, clothing and footwear industries—has so far been met. There are some good ideas contained in the programme and the Government would do well to examine them again.

In conclusion, I ask the Government not to do two things. First, they must not run down the railways, as has been threatened. I hope that at the conclusion of this debate the Minister will give a categoric assurance that there is a positive investment programme which will kill the rumours of closures that have been going around this palace in the past few years.

Secondly, the Government must not run down the steel industry. Only today I was contacted by someone from Wales who told me that 25 per cent. of the jobs in some steel works in Wales were currently in question and might well be abolished in the near future. I hope that the House will be given an assurance about that.

We put forward an 8-point programme. We want to see a capital investment programme for industrial infrastructure in Wales—this could be geared to the Welsh Development Agency—with more money being advanced, possibly from the £150 million currently allotted to £500 million. Secondly, we want an economic plan for Wales as a matter of urgency. Thirdly, we want the provision of a Welsh industrial investment fund which will attract money from bankers, institutional investors and so on, with the Government acting as guarantor and helping to lend that money to industry at low interest rates when new jobs are created.

Fourthly, we want an expansion of the community industry scheme and we urge that local authorities using this scheme should have the same 50 per cent. benefit from the EEC Social Fund as is available to the Government. That is only fair. Fifthly, we want a restructuring of the regional employment premium to a
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stepped basis to give additional benefit for additional jobs—possibly some of this could be paid in advance.

Sixthly, we want the temporary employment subsidies increased to the level of unemployment benefit and made available for all redundancies in local government as well as in industry. Seventhly, we want more thought to be given to selective imports, especially goods such as electronics, refrigerators and Japanese cars. We must organise ourselves in advance to ensure that we have the capacity to meet any increased demand if outside products are prevented from entering this country. Finally, we need a boost in the training programme and a more intensive use of existing facilities.

That brings me back to where I started. Because the necessary steps have not been taken by either party, we need a system of government in Wales that can do the job. After all, that is the only responsible approach to the problem. If other people will not do the work for us, we have to do it ourselves.

Order. Mr. Speaker earlier made an appeal for brevity in speeches. At this stage I reinforce that plea. I believe that 12 hon. Members are still anxious to take part in the debate in the approximately 70 minutes remaining before the winding-up speeches. I can accommodate them all if they restrict their speeches to about seven minutes each.

Several hon. Members have spoken of their concern about the problems affecting the construction industry. As one who has spent most of his working life in this industry, I share their disappointment that the Chancellor of the Exchequer has not seen fit to give an injection of money to the industry. Earlier this afternoon my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) said that about 170,000 men were out of work in that industry. If we add to that total another 100,000 men who have lost their jobs in the building material supplies industry, it will be apparent that one in five of those now unemployed come from the construction industry.

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The Government have played their part in trying to speed up house building. By their loan scheme they have enabled the building societies to ensure a steady supply of capital to the private house market. The Government have given every encouragement to local authorities to proceed with their own building schemes. My own local authority, the Medway Borough Council, will have 2,000 houses under construction by the middle of next year. If we can do it, I am sure that other areas can. I was surprised to learn that that is equal to the annual output of the Greater London Council.

We want to stabilise demand. Figures released earlier this week show that the house-building programme is increasing and if the Chancellor of the Exchequer has forecast aright and if the economy will lift off next year, there will be overheating in the building industry, excessive demand from the private and public sectors, and a need for new investment. Therefore, we need a means of stabilising the situation in the construction industry. That is vital, because the construction industry is the most labour-intensive industry in the country and in order to stabilise employment, we must stabilise that industry.

For many years the Trades Union Congress and the Union of Construction, Allied Trades and Technicians, a major building union, have advocated a public procurement board. Such a board would try to stabilise contracts throughout the country, region by region and area by area, so that we did not have over-heating in one area, or the ridiculous situation that existed in my area in which the Government were building a new barracks, the Central Electricity Generating Board was building a power station and a motorway bridge was being erected at the same time, all within a radius of five miles. The net result was that local industry could not cope.

A public procurement board would even out the placing of contracts and try to give industry stability. Something must be done now. Approximately 250,000 workers—one in five—in the building industry are unemployed. I am extremely disappointed that the Chancellor has not seen fit to inject money into the industry by allowing repairs schemes to go ahead and the Government's scheme for housing
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action areas to proceed. Those two measures would take this labour-intensive industry back into full employment again. In a year's time, when the industry picks up, that work would be stopped. One of the problems is that it takes nearly 18 months from the time a decision to build is taken to the start of construction,

The situation in London is far worse than it is in the rest of the country. It takes the GLC nearly five years from the time it decides to build a council house to the actual start of construction. The net result is that when the Chancellor injects money, we do not see the effect until 18 months later, with disastrous results. A public procurement board would iron out many problems.

It has also been said that if we keep investing in industry, productivity will increase, but so will unemployment. That I accept. I understand that, according to their declaration of strategy, the Government intend to create new industries.

I suggest that the Government consider two matters. One of the major problems facing the world is a shortage of homes. The United Nations report published two years ago said that there was an annual demand in the world for 40 million new homes. Surely, with the industrialised building methods that we have in this country, we could help to overcome that problem. We could carry out the manufacture of sections and components in this country, export them and have them constructed abroad. In this way we could shift factories to areas of high unemployment.

The Government should also consider expansion of North Sea oil development. I have yet to learn of any proposals by the Government for North Sea oil when it is landed. I am sure that we shall not put it straight into our petrol tanks. I am told that it is a light oil which, I understand, means that it is adaptable for use in petro-chemical plastics, man-made proteins and fertilisers. If that is so and if we are talking about the maximum flow of oil coming ashore in 1980, we should be considering a plan to carry out the work now.

Using industrialised building methods for new homes for export and creating new industries based on North Sea oil are two ideas which the Government should be investigating now.

I hope that the hon. Member for Rochester and Chatham (Mr. Bean) will forgive me if I do not follow up his remarks. I should like to refer to the remarks of the hon. Member for Caernarvon (Mr. Wigley) and those of the hon. Member for Perth and East Perthshire (Mr. Crawford) because, judging by the speeches of both of those hon. Members and their voting record, they are not lovers of competition or a competitive market, yet in this debate they were arguing for a strong kind of competition to take place within the United Kingdom—a competition for jobs. They want Scotland, Wales and England to compete with each other, to cut each other's throats in a diminishing job market and in a fight that would result in the survival of the fittest. I cannot imagine that that argument, presented to the people of this nation, can have anything other than a unifying effect rather than inviting the separatism that nationalist Members advocate.

In the week when, clearly, the kidding about jobs in this country had to stop, and in a debate as urgent to people's livelihoods as this one, it is very sad that the Labour Benches are so nearly empty. It is sad that those who advocate employment and jobs and pretend that they know how to create and to save jobs are so sparse in their attendance, not least the Scottish Members—usually among the most vocal, and who tonight are presumably finding something else to attract them and to attend to.

Since the war there have been countless false alarms about a real slump in employment in Britain. Perhaps I should say that the alarms have not been false, but that this House has chosen to make them seem false. On many occasions we have warned of the need to tighten our belts, only to ease the strain even before the first notch has been reached. However, there is nothing false or muted in the alarm bells ringing now for workers in Chrysler, British Leyland, Rolls-Royce, the British Steel Corporation, and many other companies.

No one in this House can escape responsibility for this ugly state of affairs. For General Election after General Election
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we have all promised too much and have then achieved too little, adding to the disillusion and distrust that is evident throughout Britain. For the Government and their supporters there can be little good will this Christmas. At election after election there was no problem that they could not solve, by increasing public expenditure in subsidies, by further nationalisation, or by the creation of enterprise boards. The Labour manifesto, which is so cheerfully quoted by Labour Members, said
Vote Labour and we will save your job".
Now the men who have advocated adhering to the terms of that manifesto will be lucky to save their own jobs as Members of Parliament for constituencies in the Midlands, Merseyside and Clyde-side when the next General Election comes.

At election after election, Labour said that it was only wicked Tories who talked of low productivity caused by overmanning, and of market forces that insisted upon the production of goods that people actually wanted to buy. I suggest that the CPRS Report has put paid to that bit of propaganda from Labour Members.

As many other speakers in the debate have said, it is young people eager to start their careers who are bitterly disappointed by the events of this week and by the fact that the Chancellor showed so little imagination in the proposals he made to the House today. Young people want to start new careers, to fulfil their ambitions, and not to be given a number of odd jobs to do. My hon. Friend the Member for Morecambe and Lonsdale (Mr. Hall-Davis) was absolutely right when he said that the Chancellor had started at the wrong end of the age scale. I hope that in replying to the debate the Secretary of State for Employment will give an indication that there is indeed some flexibility in his mind and in his Department regarding the possibility of early retirement for older workers, rather than odd jobs for young people.

In Scotland, fearful of the effects that this failure of Socialism will have on their chances of being re-elected, Labour Members of Parliament are preparing a new slogan. They are no longer advertising the benefits of Socialism. They
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are still intent upon kidding people about the real facts of economic life, but now the slogan is, "Vote Labour and have a Labour Government in Edinburgh as well as in London". That is two Socialist manifestos for the price of one vote. That is the escape that Labour Members are offering to the Scottish people. That might be good for the employment prospects of those joining the Civil Service, but it is not a particularly hopeful prospect for the bulk of the population in Scotland who depend on industrial activity for their livelihood.

However, there are two other bodies that have to meet the challenge of this crisis of employment. The first is my own party—the Conservative Party. The other is the management side of industry. Clearly, it is not enough for Conservatives to be impeccably correct in their economic reasoning and economic argument and to enjoy the best credentials in regard to unemployment statistics. We must show our concern and our compassion for the victims of Socialism, for those whose reward for voting Labour is now a place in the dole queues throughout Britain. That means that our plans for economic revival must be based on profits as a spur to investment, a competitive market economy, and on real incentives for the self-employed, who create jobs, and for the entrepreneur. In addition to this, we require new and effective programmes for the retraining and improved mobility of labour.

In short, we face the obligation to present a new deal to the British worker and British consumer, a new deal which will give him renewed faith in himself, in his company and in Britain.

It is essential that managements regain confidence in their ability to lead, to innovate and to communicate with workers. For far too long managements appear to have sub-contracted industrial relations to union officials, many of whom do not themselves represent or even understand the best interests of workers. The result is that there is a vacuum in our man-management relations, from which so many of our industrial problems are derived. It is a vacuum that can be filled not by the Government and trade union leaders getting together day after day, week after week, to talk things over at Chequers, Downing Street or elsewhere, but by industrial leadership.

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If the Chancellor of the Exchequer really understood the problems of this country, he would today have given the incentive to industry and the encouragement to industrial managers to pick up the reins of leadership again, with the confidence that the Government are not trying to block their way but are trying to assist economic and industrial progress. Unfortunately, the Chancellor failed to do so. That is why there is so much disappointment in the House and in the country tonight. That is why I shall vote against the Government.

I represent a constituency which contains Skelmersdale New Town, which has an admitted rate of unemployment of 10 per cent., or just over that figure, according to statistics issued by the Department of Employment. However, I believe that the true rate of unemployment there is nearer to 13 or 14 per cent. The rest of the constituency has a rate of unemployment that is well above the national average.

Therefore, hon. Members will understand my keen desire to speak in this debate, and particularly because in the Chancellor's speech and review of policy he mentioned two industries which are the linchpin of Skelmersdale—namely, Courtauld's textile factory, and Thorn's colour television tube factory. They are the two biggest employers in the new town.

I was disappointed by the Government's cuts in public expenditure. For Skelmersdale they have meant the postponement of the planned new hospital. No starting date has been announced. The land has been allocated for a long time and the hospital was intended to be built by now. An announcement of the starting date would give a badly-needed boost to the construction industry in the North-West, and it would provide good employment prospects for our skilled young people. Hospitals today are very diffierent from those of the past.

To have a new town without a new hospital makes a mockery of planning. I look forward to hearing the date for the start of building. The hospital would help to overcome some of our bad medical facilities. Having no new hospital in
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the new town, we have to depend on already overloaded facilities in Ormskirk and Wigan.

Because of shortage of time, and because some of my hon. Friends will deal with the subject of the textile industry I shall leave unsaid some of the things I had intended to say about textiles. But I must say that I am very annoyed about the almost unhurried pace at which the Government have dealt with the industry's problems, which it has faced for the past 12 or 18 months. It was interesting to see how the Government could be galvanised into action over the Chrysler car crisis, where the expected loss of jobs does not match the number lost in the textile industry in the past few months. Jobs are continuing to be lost every week in the textile industry.

Whatever is noticed in Scotland, the Government's action will not go unnoticed in North-East Lancashire, and it should not. As sure as night follows day, there will be retribution for us on the Labour Benches, and it will quickly mean that we will be transported to the Opposition Benches at the next election.

Delicate political considerations caused the Government to arrive at their decision about Chrysler.

The White Paper, Cmnd. 6315, "An Approach to Industrial Strategy", says that the Government do not believe in formal, rigid plans. They like freedom of movement so that they can respond to situations. That is very convenient for them, especially in the Chrysler situation. If ever there was an example of responding to a crisis rather than thinking the matter out, that was it.

I should like to make two more brief points, the first concerning import controls on television colour tubes. I am told by the people at Thorns that they have presented irrefutable evidence to the Department of Trade that the Japanese are dumping television tubes in this country. The Department, in its leisurely way, taking time to consider everything, as statesmen will, has sent representatives to Japan to examine the evidence, and it has said that the case has not been proved.

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Anyone making such a case has to prove that the dumped articles are damaging the economy or damaging a particular industry. The television tube industry has been damaged. But it is more difficult to prove that the dumped goods are being sold at less than the cost price in the country of production. In the case of television tubes, with the Japanese having a vertically integrated television tube and manufacturing industry, that is impossible to prove.

But I use my common sense. In my home town of St. Helens Pilkington has the most advanced glass-making factory in the world. We can be proud that Pilkington's invention of float glass brings in several millions of pounds' worth of foreign currency a year. The company has invested a great deal in new plant for this new industry. Literally just down the road from the factory is the Thorn colour tube factory, which is also very modern. There is no problem of transport between the two, because they are only a few miles apart. Neither I nor the people in those factories will be convinced that a tube that has to come thousands of miles can compete fairly.

The problem with import controls is that hon. Members and, more important, the Department of Trade profoundly believe that everybody else plays to the rules as we do, that they are all gentlemen. The people of this country have been taken for a ride. We have been taken advantage of. I have asked Questions about the matter. I believe that once a prima facie case of dumping has been made out, the onus should be on the exporting country to disprove it.

The agent should be held responsible. That happens in many other countries, and we have to put up with it. We should not let our industries go to the wall because we do not have proof of dumping that would satisfy someone in the High Court, although it satisfies those in the industry who provide the information. We should act on that information

I read the article by my right hon. Friend the Chancellor of the Exchequer in the Sunday Times. I worked for a living before I became a Member, and I am not talking as a theoretician. If I may say so respectfully, and begging pardon for the expletive that is to come
1493
—though it is very mild by modern standards—I know what it is to be buggered about by bad managers. Therefore, I know what I am talking about when we discuss productivity. In my right hon. Friend's important article he says that it is no good our crying "More investment." It must be matched by a productive capacity, which in the long run means that we can export against our competitors. We should all try to get that message across.

The reason for our doing so badly is probably a combination of many things, including bad managers, certainly. They are not all bad, but there tend to be some, and perhaps a lot, who are. Other factors are the response of trade unions to changing conditions in the factories, and undoubtedly lack of investment. But simply to speak of lack of investment is cruelly to deceive our people.

We must examine the problem far more thoroughly. We should have plain speaking on the matter, particularly from my right hon. Friends in the Government. This is a battle that we must win. The challenge is to us all. I know that with the trade unions and their wit and wisdom, with good management and with the right investment, we shall win this battle for the people of this country.

We are debating unemployment. I want to draw attention to a large section of jobs, a third of the jobs outside the public sector, but the forgotten third, the overlooked sector—the small businessmen.

Hon. Members on both sides of the House have spoken up for the industries in their constituencies—the textile industry, the glass industry and various other industries in different parts of the country. I want to speak on behalf of the thousands of small businessmen in every constituency, who not only provide a third of the jobs in this country but have the potential to provide a much larger amount of employment.

I am sure that the hon. Member for Liverpool, Walton (Mr. Heffer) will agree with one or two of my remarks. We must recognise that businesses are alive. They are not dead entities in set patterns on pieces of paper. They are living organisms. They all start as small businesses.

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They grow, grow even larger, then get old and, just like old people, they get set in their ways and their bones and they die—unless the Government come along and prop them us as lame ducks. Their place is taken by the new generation of small businesses, backed by young talent, growing into larger businesses, and it is important that we should recognise that factor.

It is important because the next upsurge in the business cycle will undoubtedly contain a large proportion of the know-how that existed in the smaller firm. New products are required in many parts of the world. It has been estimated that by 1986 half the commodities exported at that future date have not today even been invented. They comprise production that will take up the capacity of industry in the future.

Therefore, we should examine how best we can encourage the smaller business sector and enable it to do more to help our economy. That sector of business activity provides jobs and contributes to our GNP. It also provides something else—namely, the accumulation of knowledge upon which people can build. Let me give an example of this process. After the last war we saw in Denmark and Scandinavia in general the emergence of a new generation of cutlery and glass design. In almost any shop in Europe one is offered the finest glassware from Scandinavia, but before the war Scandinavia was not noted for those products. That situation arose because small businesses in Scandinavia were encouraged to produce the know-how and to use that information in building up business. That is what those industries did. Similarly I believe that we should seek to build up thousands of small firms into the next generation of expanding businesses.

The Government have led us to believe that they recognise the importance of this activity. Indeed, they said in their White Paper, "The Regeneration of British Industry":
… in times of economic difficulty it is often the small businessman, dependent to a great extent on personal wealth as a source of finance, who suffers the greatest hardship. The Government are therefore reviewing the problems of small businesses and will put forward separate proposals to cater for their special needs1495
But where are those proposals? How will they come forward? Will some Minister tell us? We are entitled to know. Again, I believe the hon. Member for Liverpool, Walton, agrees with me. I want to know what is proposed for the future.

I was sad to see nothing on any NEDC agenda or indeed at the Chequers talks dealing with the problems of small businesses. I recently sought to table a Question to the Chancellor of the Exchequer asking whether he has any plans to increase the financial incentives to small businesses. However, what answer did I receive? I was told that the question of financial incentives to small businesses was a matter for the Secretary of State for Industry. But if I were to table a Question to that right hon. Gentleman, I know what the answer will be. The junior Minister concerned will rise to his feet and tell me that it is a matter for his right hon. Friend the Chancellor of the Exchequer.

When we see one Minister after another shuffling off his responsibility to somebody else we appreciate that he may be his hon. Friend but he is no friend of the small businessman.

Where do we go from here? We all appreciate that the situation is deteriorating. We have only to look at the latest bankruptcy figures. In the first nine months of this year the number of liquidations rose by 52.7 per cent.

The small business is neglected, and it is a sector of activity that needs attention. The small businessman needs to be less managed by government. I shall not go over all the points made by my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) who dealt with this point admirably. Those small businesses need money not Government subsidies, they need to see more of their own money left in their own businesses for the purpose of investing in the way they believe to be right.

The hon. Member for Ince (Mr. Maguire) referred to the quality of investment. There is no question that small businesses make a better use of investment and produce a better return on investments than do large businesses. That statement can be backed by statistical evidence.

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The Chancellor of the Exchequer may say that he has not the money to leave in the hands of small businesses so that they may use that capital to grow into a large concern. My view is that we shall never get out of our present mess unless we take steps such as those I have outlined.

However, the Chancellor appears to have the money to spend £162 million on rescuing Chrysler, as we saw yesterday. Let us suppose that one was buying a car and the salesman said, "You can have £35 if you take the car away". One thinks twice before buying such a vehicle! The Government has been talked into spending £162 million, instead of accepting the company almost as a free gift with £35 million. What a difference that sum would have made to the situation if it were injected into the small business sector.

Any business, small or large, requires three things if it is to create jobs. First, it requires men with skill and I welcome the Government's retraining scheme to enable people to possess those skills for the time when business picks up. Business also needs capital, and we need to encourage people to invest capital. However, we shall never obtain that capital if the Chancellor continues to foist upon those people taxes by the score—capital transfer tax, wealth tax additional investment surcharge on income and other special taxes levied against capital.

Industry also needs motivated management. I have no time now to go into that wide subject, but there are ways to motivate management if we are to get our economy moving again.

I apologise, Mr. Deputy Speaker, if I have spoken for nine-and-a-half minutes. I am grateful for the indulgence of the House and I hope that I have drawn attention to the importance of the growth of the smaller business for job creation.

Usually when I have been called to speak it has been shortly after you, Mr. Deputy Speaker, have made a request to the effect that speeches should be kept to about seven minutes. I am betginning to wonder whether it is a question of cause and effect.

I want to concentrate upon those parts of the Chancellor's speech that dealt with import controls, because in my maiden speech on 4th November last year I asked for selective import controls to be imposed upon textiles and footwear. I remind the Government of the importance that our party has always attached to observing conference decisions and acting in a democratic party spirit. I draw the attention of the Department of Employment and the rest of the Government to the fact that there is now unity in the whole of the Labour movement, including the Parliamentary Labour Party, for effective, selective import controls. That unanimity does not, apparently, extend to the Cabinet.

If we are to judge the Chancellor's statement today we must do so against what has been said by various Government spokesmen in the past few months. They have said that they wish to retain a viable textile and footwear industry. They have said that they will defend industries against injurious imports. They have said that they will protect those industries which will have a viable capacity when the recession recedes and the economy picks up. Yet what has happened today? In my view the Government have taken a small and tentative step in the right direction. That is to be welcomed. But it is a very small and tentative step.

If we examine the Government's action we can see that in their decision on textile imports they have endorsed decisions already taken through the Multi-Fibre Arrangement and the burden-sharing agreement. These are important steps that have been taken in Europe and that will have a long-term effect. The Chancellor said today that there will be a low rate of growth in textile imports. When we have 6,000 workers in the cotton and allied sectors alone without jobs this year we cannot afford any growth whatever. Yet the Government
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are still bleating about our having only a low rate of growth.

Our quota levels are not realistic. Western Germany has the second highest quota level in Europe, yet its imports amount to only 83 per cent. of our figure. Western Germany is way ahead of the rest of the Community. Our growth rates are based at a high level. Although we may talk of burden-sharing, it will have no effect at all on the industry except to further its decline over the next five years at least.

I welcome what the Chancellor said about Spain and Portugal. Spain has been the most rapidly growing exporter of textile goods to this country. I understand that in quantity terms the Chancellor's proposals will amount to a reduction of between 800 tons and 1,000 tons over the next 12 months. The same applies to Portugal. For the past 20 years we in the textile industry have been saying that action should be taken against these imports. Again, the action taken is too little and too late.

What do the Government intend to do about the quota restrictions imposed against Greece and Turkey? Are these to be maintained next year? What steps are to be taken about the free circulation of imports from EEC associates into other countries in the Community and thence into this country? When will the Government give us a clear statement about the quantitative effects of the restrictions that have been introduced?

Turning to footwear, I assure the right hon. and learned Member for Surrey, East (Sir G. Howe)—who said that he was afraid of quotas—that the Government appear to have perpetrated a minor economic miracle in the footwear sector. On 23rd May the then Under-Secretary of State at the Department of Industry reported an agreement on footwear imports with the COMECON countries. He said that it would result in 300,000 fewer pairs of shoes coming into this country. That figure was based on 1974 levels. If we examine the January-July 1974 statistics we find that 5,186,000 pairs of shoes came into this country. In the same period in 1975, only two months after the statement, 4,947,000 pairs of shoes entered the country. That is a reduction of 239,000 pairs of shoes. That
1499
was achieved without the operation of the quantity restriction.

As a result of the recession there has been a reduction in the amount of footwear entering the country. The Government can be likened to a man who builds a door to stop the rain coming in but leaves a four-inch gap at the bottom. There is still sufficient room for imports to flood into this country. We are already in great difficulty. I cannot understand the logic behind the Government statement on footwear. I welcome that part of it which extends the restriction—if it is a restriction—to women's and children's footwear.

We need some effective action. I warn the Government that, although I have said that they have taken a tentative step in the right direction, the campaign waged by textile members in the last 14 months will continue and hot up. To the Whips I say that we shall reconsider our tactics after we return in the new year. It appears that there are hon. Members who, because they occupy a particular position in the political spectrum, can get away with murder. The North-East of Lancashire is not going to suffer any longer, nor is the North-West as a whole, and we will take all the steps there are to make the Government come to their senses. We do not accept that in present circumstances there can be any growth whatever in textile imports, nor do we accept any ridiculous statements about footwear.

I endorse what my hon. Friend the hon. Member for Ince (Mr. McGuire) said about dumping. It is a fact that 20p shirts are coming from the COMECON countries, but no action has been taken. It is a fact that 37p garments are coming in from the Far East, but no action has been taken. There is dumping of PVC, which affects the footwear industry, and no action has been taken. We shall push for a long-term regulator for the textile industry, so that the traumatic experience of the last 15 years, when the labour force was reduced from 260,000 to 75,000, will not be repeated. I hope that the Government will take my words to heart, because this is a serious warning. If the Government do not take them to heart now, the electorate will.

In their White Paper, "The Attack on Iinflation", the Government said:
Last year profits were so low that they were insufficient to finance stocks and work in progress and replace existing fixed capital, let alone expand it. If both the public and the private sectors are to increase investment in the future, they will need adequate resources for the purpose; otherwise the necessary improvement in job prospects and living standards will be put at risk.
This is quite right, and we heard nothing from the Chancellor today to change it. Investment return in all industry in recent years has dropped from 10 per cent. net of stock appreciation to 2 per cent. If that figure is not reversed, no measures will be enough to reduce the tragic unemployment figures.

My right hon. Friend the Member for Worcester (Mr. Walker) spoke powerfully about the social contract, whereby earnings had gone up by nearly 50 per cent. while output had not risen at all. This situation is certain to create unemployment, has done so, and is continuing to do so. Trade unions have grossly over-egged the pudding by encouraging the Government to push through legislation much of which might be commendable at the right time but which now has the effect of pricing goods out of the market, both at home and abroad.

Any hon. Member who has a farming constituency will know that equal pay for women, for example, damages our poultry industry in terms of its competition with French farmers. The Employment Protection Act, which makes it a responsible action to employ people, has concentrated the minds of management on keeping those they have, but made them reluctant to take on anyone else unless they can see that doing so is absolutely justified. Therefore, I fear that the outlook for school leavers next year will probably be worse than this year. On top of this, by giving security of tenure in respect of furnished accommodation the Government have made it difficult for people to move around the country looking for jobs.

We would all agree that there has been too much interference in industry, by all Governments, but in my constituency it
1501
is the operations of the Price Commission which give rise to the greatest concern. I quote a letter that I received from a builder in my constituency. He said:
You will appreciate that Building and Civil Engineering Contracting is a very financially hazardous industry, and that contracts are obtained in competition, therefore at the lowest price, and that a profit is not always made on all contracts. To restrict this Company to a profit of 2 per cent. on turnover where such financial risks are taken is unrealistic for this industry, and does not seem just when competitors may continue to make 6 per cent., 7 per cent. or even higher.
He goes on to explain how the operations of the Price Commission have put at risk 200 jobs in my constituency.

Equally, many major companies engage in investment overseas, because if a company can see that it can control the return it gets in one country, it would rather invest there than in a country where it cannot control the return. There are other arguments on tariffs which make overseas investment essential anyway. Thus, the effect of the Price Commission is particularly damaging at present. I hope that the Government will accept the advice of the Bank of England in this respect.

There is also in my constituency the tragedy of two boatbuilding firms which have found their livelihood threatened overnight by the 25 per cent. value added tax. The full damage is hard to estimate, but the feeling of bitterness of someone who has put in a lot of hard work in building up a business, employing people and giving them a livelihood, only to find it all wasted by Government action, is appalling to see.

There is also the Government's refusal, when they interfere, to do the things that we would like to see, particularly in the West Midlands, where unemployment is up by a factor of three. We look to the Government to revise their policy on industrial development certificates.

The stop-go policy associated with too many Governments has particular problems for our industries. The carpet manufacturing industry, which is strong in my constituency, welcomes the relaxation of hire purchase, but it found it difficult to plan when it did not know which way the Chancellor would deal with demand. If it had based its plans on his forecast of the inflation rate, it would have been in an even more serious position, but mercifully it did not.

1502
Equally, jobs in my constituency were taken away by the closure of a defence depot. Hundreds of jobs were lost after three changes of policy. The people whose jobs have been lost could easily have found others two or three years ago, but because they had to hang on they are now having to look for other jobs in difficult conditions. That also indicates a lack of sensitivity by the Government.

Most damaging of all in Government policy has been their determination to penalise the creative and subsidise the inefficient. My hon. Friend the Member for Basingstoke (Mr. Mitchell) has made clear the effects of capital taxation on medium-sized and growing businesses. Many hon. Members feel that their constituencies are too dependent on one industry and will be sympathetic to the need to encourage small businesses so that there can be more diversification of industry. If the Government continue to treat the creative so cavalierly they cannot be surprised if enterprise is lacking.

Equally, the Government's attack on management is immensely damaging, together with the high levels of taxation. It means that even to keep pace with inflation pay rises have to be given which appear to be enormously divisive. I hope that I have given to the House some illustrations of the way in which Government policy has made life difficult for industry in my constituency and has created unemployment. I hope that when the Government consider what they can do to improve the present situation, they will seek to work with private enterprise and not against it.

I welcome the Chancellor's announcements, little as they are. They will go some way towards ameliorating the worst effects of the present unemployment situation. Of course, we still have a long way to go. I hope that subsequently the Government will attempt to start on the road to a higher level of employment. I support the Government's rescue of the Chrysler motor car company, but not the way in which it has been carried out. I should have preferred a larger element of a public stake. The important factor is that we are saving jobs.

1503
I represent a constituency in the Merseyside area, an area that has been scarred by years of remorseless, grinding and persistent high-level unemployment. I appreciate only too well the terrible effects on morale, on families, on towns and on the whole environment of long and large-scale and persistent unemployment. My hon. Friend the Member for Liverpool, Walton (Mr. Heffer) demonstrated a similar appreciation in a moving speech. Merseyside has had high levels of unemployment for a long time and has experienced attendant social problems such as poor housing, inadequate local amenities and a high level of social deprivation.

I have listened to what I think most hon. Members would agree to have been constructive speeches from both sides of the House, with the exception of the contributions from the nationalist parties. I believe that they were disgraceful, selfish, parochial speeches. It is natural that we are all concerned with our constituencies. We have a duty to draw to the attention of the Government the problems that we find in our constituencies. If we do not do so, no one else will. However, it is not our function to engage in some kind of crude bartering, setting one section of the community, or one section of the country, against another. It is necessary for us to have some sense of priorities.

I have listened to those who have spoken movingly about their constituents and the high levels of unemployment in the areas that they represent. They have spoken of levels of unemployment of 4 per cent., 5 per cent., or 6 per cent. Even though I have been called at this late hour, it is necessary that I should point out that there is 11.1 per cent. male unemployment in Ormskirk and 12.2 per cent. male unemployment in the Merseyside special development area.

The highest unemployment rate amongst males in the whole of Western Europe is to be found in Kirkby—namely, 25 per cent. There are now 73,000 men unemployed in the Merseyside special development area. In the pipeline there are further lay-offs in the shipbuilding and ship repairing industries and in Plesseys and Pilkingtons. That is despite the special development area status, the regional employment premium, advance factories and all the paraphernalia that
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successive Governments have had in their armoury to help the regions. Merseyside has 50 per cent. of the total unemployment in the North-West in spite of the regional policies of successive Governments.

The problems faced by Merseyside are not new. In common with other areas, it has been hit by the international recession. It is unfortunate that it has always been hit harder by recessions than other parts of the country. It has never enjoyed a boom. Apart from experiencing a level of unemployment higher than that in any other comparable area, it has also been subjected to a slow but rigorous decline of its productive capacity and industrial infrastructure. If we do not check the decline now, there will be catastrophic consequences in future.

In Merseyside we have experienced a net loss of 71,000 jobs in the past decade. A brief glance at the vacancies compared with the registered unemployed is a depressing experience. There is one clerical vacancy in Ormskirk to 59 registered unemployed males. There are no labouring vacancies to 207 registered unemployed males. In Kirkby there are no vacancies for general labourers as against 2,196 registered unemployed males.

In the Merseyside special development area the situation is even worse, there being 18 vacancies for labourers as against 29,162 registered unemployed males. The figures become more alarming and depressing as one continues to examine them. In addition, there are thousands of school leavers who have grim prospects and blighted futures because of the lack of viable employment opportunities in the area.

On Merseyside, we face a crisis of morale and a crisis of confidence in terms of people's confidence in themselves and in the future of Merseyside. That confidence has taken a severe blow as industry has steadily and remorselessly moved out of Merseyside and employment opportunities have gradually decreased.

We believe that Merseyside—especially Kirkby, which has been highlighted in a special police report recently as a crisis town—is now a crisis area which requires special attention and special assistance. In view of the high level of unemployment on Merseyside and in Kirkby, I
1505
ask my right hon. Friend to give Merseyside the status of Wales and Scotland and to set up a Merseyside development agency to co-ordinate planning and investment for Merseyside.

We believe that Merseyside is a crisis area which requires special assistance and special help. My right hon. Friend should ask for an urgent meeting between the Secretaries of State for Employment and Industry to review the long-term employment prospects of the area, to look at its structural problems, which are very deep-rooted, and to attempt to reverse the trend towards decline.

I suggest also that the area should be marked out as an extra-special special development area by giving us, for example, the headquarters of the nationalised shipbuilding industry. We need additional resources. Hon. Members on both sides have pointed to the construction industry. On Merseyside we have 14,000 unemployed, yet, as my hon. Friend the Member for Walton pointed out, there are 22,000 people on the waiting list for houses on Merseyside. We need £85 million spent on housing repairs in Kirkby alone. We need a new hospital in Skelmersdale. Most of the old Victorian schools in the Ormskirk rural area could be renovated. We have work there for the building workers to do, and we have the building workers to do it. It is a disgrace that the two have not been matched together for the regeneration of the area. We could also build more Government offices, so that this time we got civil servants to Merseyside.

We canot accept further complacency about the area. The people of Merseyside have been loyal to a Labour Government. They did not return a Labour Government to be on the dole. Labour Governments have done a great deal for Merseyside as a whole, but, in all fairness, it has not been enough. The Government must act, and act now. If they do not mount a rescue operation on Merseyside now, eventually they will have to mount an even bigger one, at a much greater cost to the taxpayer and to the community as a whole.

The situation on Merseyside is destroying people's confidence in themselves, and it is destroying their confidence in a Labour Government. That loss of confidence in themselves and in a Labour
1506
Government would be a tragedy for us all if it were allowed to go any further.

I listened with sympathy to much of what the hon. Member for Ormskirk (Mr. Kilroy-Silk) said, especially when he referred to the considerable employment difficulties on Merseyside. But it seemed to me that, during the Christmas Recess, hon. Members in all parts of the House should accept as compulsory reading the terms of the election manifesto on which the Labour Party was elected in October 1974. In the paragraphs of it which placed enormous weight on the social contract—undue weight, in the view of most of us—it was stressed that the social contract provided a base upon which promises would be fulfilled in social matters and that these had been fully costed. So we understand the bitter disappointment of the hon. Member for Ormskirk about those aspects of Government policy.

The social contract was also to provide the base upon which the Labour Government declared their determination to restore and to sustain full employment. A little more than a year later the unemployment figures provide sad and deeply worrying evidence of the consequences of that period of Government. In national terms, unemployment has risen from 612,500—about 2.7 per cent—in October 1974 to 1,120,000—4.9 per cent.—in November 1975. All reliable forecasts show that the inevitable consequence of present trends is that unemployment will continue to grow at a disturbingly high rate in 1976.

Looking within those national figures, it is unhappily clear that unemployment has increased at a particularly high and frightening rate in the great industrial towns and cities. There is also an ominous trend in unemployment in industrial areas that have previously enjoyed prosperity and stable high employment. For example, in the West Midlands unemployment has increased by more than 137 per cent. since February 1974.

In these hard circumstances, it is with bewilderment that people in that area read what the Secretary of State for Industry said yesterday—namely:
The redundancies will fall most heavily in the Midlands, where we have the best prospects of providing other work as trade picks
1507
up."—[Official Report, 16th December 1975: Vol. 902, c. 1166.]
People ask how long that will be. The Secretary of State for Industry must be completely unaware of the deep apprehension and uncertainty in the West Midlands conurbation where industry after industry has encountered severe difficulty and even disaster in recent months. There is a great fear that Ministers are being less than candid with people in industrial areas about the depth of the problems that we face.

The Chancellor of the Exchequer created one false dawn in September 1974 when he optimistically forecast better times in 1975. No sensible person in those industrial areas wants to be misled again. False optimism and delay have postponed action to control inflation. The penalty is being suffered with exceptional severity in industrial areas by the loss of jobs.

The one bright spot in the West Midlands is the National Exhibition Centre. I am proud of the support that was given to that great project by the previous Conservative Government. The centre is now being completed in fine style. It will be a focal point for the sales efforts of large numbers of private enterprise companies. The future employment and prosperity of countless thousands of our people depend upon the success and profitability of those efforts.

The Government cannot be reminded too often of the many small and medium-sized companies in the West Midlands which can make substantial extra contributions to the national economy. My hon. Friend the Member for Basingstoke (Mr. Mitchell), in a very good speech on that subject, stressed the tremendous importance of small and medium-sized companies and the extra contribution to employment that they could make. I must repeat his question: what are the Government proposing to do to help those companies in their endeavours? The Government should encourage them, not hinder and burden them.

I want to refer briefly, within the time limit imposed by you, Mr. Speaker, to one important matter raised by my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe). Mobility of labour is of national significance. In
1508
these hard times people need and are willing to move to jobs. Despite that, transfers of council house tenancies are extremely difficult to obtain. Goodness knows, it is hard enough for a person to get a transfer from the south to the north side of Birmingham by way of the housing department, but it is well-nigh impossible for council tenants to get a transfer from Birmingham to Leicester, or the other way round. People who want to move to new work are often locked into their present tenancies. Urgent action at Government level is needed to make transfers of this kind much easier, and the Government must also realise that home ownership makes mobility of labour much easier.

Many hon. Members who have lost their seats have been able to move to other constituencies and serve them well because they have sold their houses and bought another in the new constituency. There is no reason why the privilege of ownership should be denied for Socialist doctrinal reasons to thousands of council tenants throughout the country. Socialist attitudes are restricting the spread of home ownership by preventing tenants from buying their own homes, and this causes immobility in the working population and consequently adds directly to unemployment.

This is a matter of tremendous significance to working people. They should be able to move to new jobs. The present system is inadequate and unduly restrictive and the Government should change their attitude towards the transferability of tenancies and the spread of home ownership among council tenants.

When the Government Chief Whip announced, two weeks ago, that this debate was to take place he said we should not use it to belly-ache about the rates of unemployment. The Government knew all about that, he said, sticking out his bottom lip. He urged hon. Members who took part in the debate to say something constructive. I do not intend to bellyache, and I hope that my contribution will be regarded as constructive, but I wish to draw the attention of the Government to the situation in the Yorkshire and Humberside Region in general and my area in particular.

1509
It is significant that only last Friday the South Yorkshire Metropolitan County Council produced a comprehensive economic survey of the Yorkshire and Humberside Region, particularly South Yorkshire. The survey opens with the Hunt Committee's Report of 1969, when the Yorkshire and Humberside Region was granted intermediate development area status. That report is nearly seven years old and it is interesting to look at the criteria contained in it. They were slow growth, a slow rate of addition to industrial and commercial growth, significant unemployment, sluggish or falling employment, a low percentage of women at work, slow growth of personal incomes, low earnings, heavy reliance on industries whose demand for labour was falling, poor communications, and decaying environment and dereliction. On each of these criteria South Yorkshire and my area qualify for more than intermediate status. When are the Government going to do something about it?

The national unemployment rate is 4.8 per cent. In my area it is 9.6 per cent. The national male unemployment rate is 6.6 per cent. In my area it is 12.5 per cent. Last July this figure was 11.8 per cent. The increase is probably made up of young lads who left school in the summer and have still not found a job. We used to depend wholly on the coal industry, but we can do so no longer. Boys used to leave school and know there was a lob in the pits if they wanted one. That is no longer so.

We are told about the Selby bonanza. Here is a beautiful coalfield, which we hope will soon be developed, yet the Selby District Council has expressed serious fears about the probable demand for houses, school places and social services that will arise when the field is developed and that the council cannot meet. My bet is that the National Coal Board will man the Selby pit by transporting its manpower from other localities. My area is 15 miles from the Selby development. I believe that Selby will be manned by miners from the pits in West Yorkshire which, by the time Selby comes into production, will be closed because their reserves will be exhausted. They are much nearer to Selby than my area is

I have a dismal story to tell about female labour in my constituency. For
1510
years the women and girls there have been transported to work in the wool textile areas. Now they are on short time, or mostly on the dole.

On the environment aspect, I pay tribute to my local councillors, especially those members of South Kirkby and Moorthorpe town council who, in conjunction with the rest of the community, gained second place in a nation-wide competition for the tidiest pit village. The people in my area are deeply conscious about the environment, and conditions there are not as bad as some people seem to think.

The situation in communications is a different kettle of fish. My constituency is bounded by a motorway box. On the west side is the Ml, on the east side the A1(M), to the south is the M18 and to the north the M62. However, trunk roads into my area are atrocious. I hope that the Department of the Environment will hear that in mind.

The latest figures I can find for family incomes relate, unfortunately, to 1973, but they are significant nevertheless. For the whole of the country in that year the average family income was £46.16p. In my area the figure was £41.39p. 1 do not think that the situation has improved very much over the last two years. A recent survey by Which? said that Yorkshire and Humberside had the lowest housing costs and the cheapest cost of living. We also have the lowest earnings.

I turn now to the question of growth and investment. For the whole of the country the numbers employed in fast-growing industries amount to 10.4 per cent. The figure for my area is 71 per cent. The comparable figures for slow growing and declining industries are 13.4 per cent. for the country overall and 17.4 per cent. for my area.

I appeal to my right hon. Friend the Patronage Secretary not to accuse me of belly-aching. A few weeks ago I pointed out in the Chamber that under the Hardman proposals for the relocation of Government Departments not one job had been given to Yorkshire and Humberside. Government Departments were transferred to Scotland, Wales, the North-West and the North-East, but not one Department came into Yorkshire. If one had, I have no doubt that it would have gone
1511
to one of the more salubrious parts, such as Harrogate.

I have not belly-ached. I have tried to be constructive. I have done what any conscientious Member ought to do, which is to demand a better deal for the people he represents. My area needs full development area status. We have advocated that for a long time, but so far our pleas have fallen on deaf ears. Will the Government now give us that status? We satisfy all the criteria for a better deal. That we must have, and nothing less.

We have had a long debate in which many hon. and right hon. Members have taken part. It is an apt commentary on the House of Commons that in an important debate on unemployment there should have been so few hon. Members listening other than those who wished to take part. It is about time we looked at our procedures and at the amount of work that goes on in the House if we can muster only 35 or 40 hon. Members for an unemployment debate.

We have heard interesting speeches, many of which have come straight from the heart. I hope that the Secretary of State for Employment will deal with the questions that have been asked and those which I shall ask him, especially the question asked by his hon. Friend the Member for Rossendale (Mr. Noble) about the import of cheap shoes from Eastern Europe. The hon. Gentleman seemed to dislike the Chancellor's announcement. Incidentally, I should like to know where the Chancellor is. He should at least have had the courtesy to come to listen to the winding-up speeches.

The measures announced by the Chancellor amount to the closing of the stable door long after the horse has bolted. On the problem raised by the hon. Member for Rossendale the Chancellor has even left half the door unbolted. The announcement made today might in ordinary times have been an answer to a Written Question, so little has been its impact. Government supporters have spent their time talking about the Government's vacillation and their refusal to take action before now.

1512
The Chancellor, in a little philosophising, said that he was propelled into politics by the unemployment of the 1930s. If he carries on as he is doing, he will be propelled out of politics by the unemployment of the 1970s. The hon. Members for Ince (Mr. McGuire), Liverpool, Walton (Mr. Heffer), Wolverhampton, North-East (Mrs. Short) and Ormskirk (Mr. Kilroy-Silk) and many of my right hon. and hon. Friends all referred to the seriousness of the unemployment figures. The United Kingdom figure, on a seasonally adjusted basis, is 1.125 million, not 1¼ million as many hon. Members said, but it is going up at the rate of 37,000 per month.

My right hon. Friend the Member for Worcester (Mr. Walker) said that in the Midland region unemployment had trebled in two years. In the West Indian community it has quadrupled in the same period. A year ago last November the unemployment figure was 613,000. I hope that the Secretary of State will deal with the IDC problem in the Midlands by permitting a considerable relaxation of the policy to help the area. The West Midlands is now in danger. We saw this coming about. To help the development districts the West Midlands area has been starved of new investment for so long that it is suffering in consequence.

Mr. Iain Macleod used to stand at this Box when the Conservatives were last in Opposition between 1966 and 1970 and accuse the Government of being responsible for 500,000 unemployed. At that time, he could say that only in three months of 13 years of Conservative Government was unemployment over 500,000, while for month after month it had been over half a million under the Labour Government. Now, for two months running and for the first time since the war, we have had over a million unemployed on a seasonally adjusted basis. No hon. Member can escape the conclusion that the figure throughout 1976 will be more than a million. That is the size of the problem we face.

Does the right hon. Gentleman think that the employment situation in the United Kingdom has been assisted or hindered by our membership of the Common Market?
1513
Would he comment also on the employment levels of our partners in the EEC?

I would probably have come to that, but I shall answer it briefly now. Membership of the EEC has had nothing to do with unemployment in Britain over the last year or two. So I dismiss that argument. I have the figures for countries in Europe. It is interesting to see that many of our Community partners now have lower percentages than we. Although Germany's percentage is still fractionally higher than ours, unemployment there is levelling out. Our depression and recession is much later and deeper than that of European countries.

I want to say, with all the force and conviction that I can command, that the Conservative Party has always rejected unemployment as a method of fulfilling economic aims. We stand as committed to a policy of keeping employment high and offering people the chance of a job as any other party in this country.

We must judge the Government's policy against the background of the need to control inflation. The Chancellor can do little at the moment and he has done little today. Reflation is not one of his options. It cannot be while inflation is still running at 24 or 25 per cent. and, as my right hon. Friend the Member for Worcester said, we are paying ourselves 51 per cent. more for producing 5 per cent. less than two years ago.

All that the Chancellor can do is prepare for the upturn when it comes. For heaven's sake let us have less complacency and more humility from the Chancellor about his forecasting. [Hon. Members: "Where is he?"] He still does not bother to come to the House of Commons. During the General Election last year the Chancellor said, on 26th September:
I am certain we can get through the whole of next year with well under a million unemployed.
That was probably the same night that he was talking about inflation at 8.4 per cent.

During his Budget Statement this year, the Chancellor said:
… I think it sensible to work on the assumption that the recovery will be under way by around the turn of the year…1514We may…be close to the bottom of the trough."—[Official Report, 15th April 1975 Vol. 890, c. 278.]
He has always got his forecasts wrong, and many people are hurt as a result.

The late Iain Macleod used to say, referring to the right hon. Member for Cardiff, South-East (Mr. Callaghan), that for him the law of averages never worked because he was always wrong. Exactly the same applies to the present Chancellor. He has not yet got one forecast right during the period he has been Chancellor. I hope that when he gets his forecasts wrong, he will not continue to blame other countries for what is happening overseas, because that will get us nowhere.

The hon. Member for Rochdale (Mr. Smith) asked what we would do and what our position as a party was. Given the necessity for getting inflation under control before we reflate, how can we create a situation in British industry and in the economy generally which will help to get expansion going again? The vital factor is the economic climate which a Government can create and the confidence that can come to British industry from that. Everything the Government do militates against that confidence. The Dock Work Regulation Bill, the nationalisation of the shipbuilding and aircraft industries and the measures on Chrysler yesterday add up to a climate not conductive to building up confidence. Overseas investors will not invest their money here or go ahead with building factories. It is a depressing situation. That is the lesson that the Government have not learned, and until they learn it, we shall not make the necessary progress.

I and many of my right hon. Friends greeted the Government's new policy announcement at Chequers with incredulity but relief. We hoped and prayed that our incredulity was wrong, but, unfortunately, we have been proved right all too soon. The Government must have known between a month and six weeks ago when they put forward the Chequers proposals that they would be faced almost immediately with the Chrysler problem. What did they do? They blew very stern about Chrysler to begin with and then totally changed their mind.

1515
Not for a long time have we seen such incompetence from any Government as in this Government's treatment of the Chrysler situation and import controls. We must recognise that if we are to get industry moving we have to support and build on success. This is what my hon. Friend the Member for Basingstoke (Mr. Mitchell) meant when he spoke about the importance of small businesses and the need to give them some incentive.

Will the right hon. Gentleman the Secretary of State give us more information about the financial incentives that the Government have promised for small businesses, or will the Government shuffle it off again by saying that it is not the responsibility of the Chancellor of the Exchequer hut that of the Department of Industry? Who will answer this? How else do we get fobs in places such as Linwood, Ebbw Vale, or Coventry unless new industries go there? The only way in which we can get new industries to those places is to give the incentive and encouragement to individuals and small businesses so that they believe it is worth while and will invest. Each time we prop un an old industry, we handicap the chances of a new one prospering.

There is also the psychological factor to be considered. The belief has grown up that if one makes enough noise in one's jobs, the future is assured. If that is allowed to gain acceptance, it will be a ruination of our life as an industrial nation. It is not cheaper to pay subsidies to keep a business going rather than to allow unemployment if the result of that is merely to put off the day when one actually gets down to reforming one's industry.

We had a new definition of economics last night from the Secretary of State for Scotland who said,
It will also be the cost to the country of the loss of taxable revenue."[Official Report, 16th December 1975;Vol. 902, c. 1295.]
He was then talking about supplying more jobs in Scotland for Chrysler. What he was in fact saying was that if the Government, through the taxpayer, put a lot of money into a company, they would then get the tax from the people who worked in that company back again into the Exchequer. That is the economics of Bedlam. I should have thought
1516
that the right hon. Gentleman would have realised that.

There must be a right to work, but however much we might desire that, it cannot be in the same job, in the same place and with an increasing standard of living. People must be prepared to move. That was a point made by my hon. Friend the Member for Birmingham, Hall Green (Mr. Eyre) when talking about housing.

I come to the Chancellor's proposals concerning job creation. As regards the apprenticeship award scheme, I should like to know what the Secretary of State for Employment will do about second-year apprentices, the apprentices who at present are under the award scheme but will be coming out of the first year next summer. Will provision be made for them to have a second year and subsequent years if they cannot find employment? What will be the deficit of the British Steel Corporation? How many jobs will be saved by the stockpile? Have the import restrictions received EEC approval? What will be the effect on employment, and so on? I hope that we shall have some proper answers tonight. Why has antidumping action not been taken more quickly on a number of commodities which some Labour Members have mentioned this evening?

My hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley), in an excellent speech, talked about the decline in our industrial sector. The truth is that if we do not recognise this decline as a nation, we have very little chance of success. In terms of investment, technology and human relations, and hence both design and productivity, we are slipping behind a good many other countries. We have to make better use of the investment that we have, as the hon. Member for Ince pointed out.

I want to comment on human relations in industry. I believe that this matter goes absolutely to the root of our problems as a nation. It is not correct, as the Chequers talks seemed to suggest, that it is a question of saying to the unions "It is your job to get the co-operation of your people." The fact is that it is the job of management to get the co-operation of its work force.

Management has had an extremely difficult job in the last few years. However, we do not do management justice,
1517
nor do we do our work force justice, if we believe that the problems are confined to problems on the shop floor relating to the unions, because it is so much the job of management to manage and in far too many cases in British industry management has given up its responsibilities and left them to the unions. I do not believe that that is what the unions want or that it is good for management.

What we need is supervision by management, making certain that management is in charge at shop floor level. We need to have smaller groups and much better communication with those smaller groups on the shop floor. I believe as well that we need consultative councils which can meet regularly and discuss all these matters properly. That is the way in which employee participation can function properly. It does not need to be done by legislation. I think that it needs to be done by action on the shop floor. If we can get that message home, we can make some progress.

There was nothing in the Chancellor's speech today—[Hors. MEMBERS: "Where is he?"] We want to know where the right hon. Gentleman is, but we are quite glad that he is not here. He does not contribute much when he comes, so he might as well stay away.

There was nothing in the Chancellor's speech about the future. We need to know how the right hon. Gentleman will manage the economy through the next year or so. The TUC undertook wage restraint this year on the understanding that by the middle of next year the unemployment rate would start to fall. We all know now, from what the Chancellor has not been able to do today and from what has happened in the last few months, that the unemployment rate cannot fall next year. Therefore, we know that the main basis of TUC support for the Government's pay policy no longer exists.

The Government and the Chancellor had better admit now the extent of their failure, admit that there is no way in which they can reduce unemployment over the next few months. If they say that now, they will command at least some confidence with the work force. If not, they will simply strengthen the hands of those who wish to undermine our pay policy and our fight against
1518
inflation and who seek the collapse of our society.

I do not accuse Labour Members of wanting to create unemployment: I know that they do not. But I am entitled to tell them "Look at what your policies are doing. Look at the record." I am entitled to say that the cynical and dishonest speeches of the Prime Minister will leave a trail of bitterness and suspicion throughout the nation. The Prime Minister accused my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) and me of wishing to see 1½ million people out of work. He added in that speech:
This must be said, and said clearly: A party which contemplates unemployment on that scale is no party to govern and unite Britain.
We do not need to reach that figure to condemn the Government and the Prime Minister. Complacent. incompetent and deceitful, they convict themselves. It is not surprising that in the past two days they have had so little support from the Benches behind them.

The right hon. Member for Lowestoft (Mr. Prior) made some remarks about the desirability of the House examining its procedure to see whether some of the difficulties in filling the Chamber throughout the normal parts of the day can be overcome. I believe that whatever differences we may have on other matters most of us agree that something must be done about the load of work imposed on Members of Parliament, to ensure that that can happen. Although I may find it difficult to discover many other statements by the right hon. Gentleman with which I can agree, I agree with that opening remark.

I also agree—and I believe that every other hon. Member who has spoken agrees—with what my right hon. Friend the Chancellor of the Exchequer said at the beginning of the debate. He began his speech, as I do, by giving the number of unemployed. On 13th November there were 1,100,000 workers unemployed, including 40,000 young people who left school this summer and who are still without their first proper employment. That makes a total of 4.9 per cent. of our labour force.

1519
These are appalling figures, and I do not seek in any way to be complacent about them. Indeed, nobody could say that in their period of office the present Government have sought in any way to play down unemployment difficulties. The situation is unacceptable to any civilised nation.

I accept the things that have been said by hon. Members on both sides of the House in this respect. Perhaps they were said most eloquently by my hon. Friends the Members for Liverpool, Walton (Mr. Heffer) and Ormskirk (Mr. Kilroy-Silk). We appreciate the situation on Merseyside. Furthermore, I do not seek to qualify what has been said by hon. Members from Wales, because the situation in Wales is appalling. We also know about the unemployment in the Midlands. The situation there has been described by my hon. Friend the Member for Wolverhampton, North-East (Mrs. Short) and the right hon. Member for Worcester (Mr. Walker). Unemployment in that area is on a scale unknown since the 1930s.

I disagree with those who try in some way to suggest that the figures are not as substantial as they seem. I believe that the figures are extremely serious. Indeed, in some respects the figures mask some of the unemployment that exists in addition.

I shall not attempt to swap comparisons with the right hon. Member for Lowestoft in relation to other countries. I think that the right hon. Gentleman was mistaken in his approach. The figures in this country are, in all conscience, bad enough, but it is true to say that the figures are somewhat worse in most Western European countries. That is no satisfaction to me, but that is the fact of the matter.

One of my hon. Friends asked about the Common Market. I remember, in the referendum campaign, posters to the effect that it was all "Jobs for the boys in Europe". But there are fewer jobs, comparatively, for most of the boys in Europe than even in this country. However, the situation in this country is bad enough as it is. I hope that we shall not base our arguments solely on that premise. Nothing that I say is intended to mitigate the fact that the Government recognise the seriousness of the situation.

1520
I have no doubt that people will say that in the face of unemployment figures on such a scale the proposals announced by my right hon. Friend the Chancellor of the Exchequer today are not enough. Indeed, I would have been surprised had some of my hon. Friends taken a different view, especially those who know the situation on Merseyside. Of course, those measures are not enough to deal with the problem. We must see how we progress before moving to a situation in which we may have to bring in measures sufficient to deal with the problem.

However, having said that, I am sure that nobody will seek to deride the importance and significance of the Government's measures. They do not solve the unemployment problem—we have never said that they were a major contribution to that end—but they will provide jobs for many thousands of people, and that is important.

Let me turn to the question of the temporary employment subsidy. When an announcement to that effect was made in our debates last July it was not well received by some hon. Members, but it must be agreed that those measures have provided extra jobs for thousands of people. It is true to say that in these critical months that action will rescue the jobs of 60,000 or 70,000 workers—and that is worth doing.

I said that over the coming months we believe—on the basis of the take-up of the subsidy so far—that that is a proper estimate. We think that it was well worth doing. It does not solve the problem. There is also the subsidy for school leavers. I agree with my hon. Friends who say that that does not solve the problem. I know that. But since it has been applied it has reduced the number of unemployed school leavers faster than they have been reduced in previous comparable months, in so far as the present situation can be compared with that of previous years.

Is the right hon. Gentleman aware that if we take the figures up to the age of 20 rather than the immediate school leaving age it will be seen that we
1521
have never had such bad figures? Does he appreciate that the number may be 180,000?

The hon. Gentleman has not fully appreciated what I said. This does not solve the problem by itself. This problem is more serious than any other we have had since the war, particularly as it affects school leavers. All I am saying is that this measure has assisted. There are thousands of school leavers now in jobs who would not be employed were it not for the subsidy. It was worth doing, even though, basically, it is a minor matter.

There is also the job creation scheme upon which I do not want to expand. My right hon. Friend the Chancellor mentioned it earlier. I know that people can pick upon aspects of it and deride it. We say that it is a scheme that has got off to a good start in many ways. It is providing jobs for a number of people, especially young people. It does not remove the chance of people receiving training in skills. We believe that the scheme should be encouraged rather than derided. It does not solve the problem, but has provided extra jobs for thousands.

I have already made the qualifications which the hon. Gentleman makes.

Training is another important aspect of our policy. I shall not give all the figures to the House, but our training measures are having a considerable effect on the employment situation. One of the few good signs in the grim employment outlook is the way in which the number of apprenticeships in the engineering industry has been kept up. In previous recessions there has always been a big slump in apprenticeships, particularly engineering apprenticeships. That has not happened on this occasion. The level has been kept up to normal, despite the severity of the recession. That has been due to measures taken by the Government and employers, and to co-operation by the unions.

The right hon. Member for Worcester asked whether we would consider carrying
1522
on the apprenticeship scheme into the second year. That is a perfectly reasonable proposal to consider. It is the first year of apprenticeship which falls heaviest on the employer and, because of that, assistance in the first year is of major importance. This is not just a matter of a few hundred jobs; this concerns thousands of the most important jobs from the point of view of the future of this country. Amounts have already been made available by the Government for assistance with training on a scale never before considered by previous Governments. The measures we have taken to provide training in this recession have been on a bigger scale than anything done before.

We can build on that. But it does not mean that we are satisfied with it. I was glad to hear what the Chancellor said, because any Minister is glad to hear a hint that the Chancellor has already given in to his proposals. With the Manpower Services Commission, we are preparing further measures to assist with training, particularly for young people and apprentices. One of the reasons why these measures are not included in today's package is the assistance that the Government gave to the Manpower Services Commission in the package announced on 24th September. Some said then that it was only a minor package, which would not have much effect, but already it is enabling the commission to plan ahead. I hope that further measures for training will be put before the House and the country very early in the new year.

This is all very interesting, and it may be admirable, but will the right hon. Gentleman now give some message of hope and comfort to the 5,000 Chrysler Ryton, workers, many of whom are middle-aged and hundreds of whom live in my constituency?

I shall come to the Chrysler situation later. I promise that I shall not seek to escape it by any means, and certainly I shall try to cover that aspect.

None of us claims that these measures solve the problem, but our measures for school leavers, the temporary employment subsidy and particularly the measures for training, have made a contribution that helps to curb the problem. But of course
1523
we do not claim that they solve them. It is not only a question of overcoming problems of training and preparing for the time when the economy improves; we want to improve our industrial relations, which has been one of the major objectives of the Government.

My hon. Friend the Member for Newport (Mr. Hughes) referred to the situation at Llanwern, which epitomises the nation's problems. It is not a shortage of investment in Llanwern but a combination of factors—management, differences between some of the unions, and complicated and awkward problems that have to be solved by patience and good will, and by the people working there not pressing their claims to the limit. I believe that with the assistance of the report from the Advisory Conciliation and Arbitration Service we may be able to find a solution. Meetings are taking place about it today.

A major objective of the Government has been to improve industrial relations. In this, we are having some success. I do not deny that many difficulties remain and that many industrial disputes should not take place. I am not passing judgment on their cause, but they inflict grave injury on our industrial performance. I do not deny that. But we are making progress—and perhaps because we are making progress the disputed figures are not quoted so often by those interested in the question.

In the 12 months to October, days lost in industrial stoppages were 42 per cent. down compared with the previous 12 months. The total number of days lost for this year so far is running at less than the average annual level since 1968—that is to say, lower than the average annual level since 1968—that is to say, lower than in any of the years of the last Government and less than one-third of the total of 1972.

I come now to the question of Chrysler. Hon. Members have spoken about it, so I do not see why I should not do so. I have every wish to discuss it, because today we are debating unemployment. It would not have been much good for the Government to debate unemployment in the House today if we were not to point out that 55,000 jobs could have been lost by the closure of Chrysler. One of the considerations that
1524
we have had in mind throughout these anxious weeks has been to save as many jobs as we could legitimately save. That is what we have sought to do. [Hon. Members: "How long?"] Let us take a look. Hon. Members have said that the Chrysler deal is a bad bargain for the country, that the Government put in all the money, and that Chrysler does not put in any. At least, that is the gist of the complaint.

Let us assume for a moment that Chysler in the United States does not go bust. On that assumption, let us look at the Chrysler and Government commitments in this country. It can be seen that they are balanced. If the United Kingdom operation breaks down at the end of 1976—let us assume failure first, and look at success later—we will have lost at most £50 million and Chrysler at least £42 million—£10 million trading loss, £20 million guarantee of basic capital development, £12 million of Alpine capital development, plus any trading losses over £60 million. If the operation breaks down at the end of 1977, we shall have lost at most £60 million and Chrysler at least £60 million—£20 million trading loss, £28 million guarantee of basic capital development, £12 million of Alpine capital development, plus any trading losses over the limits, plus any further capital development. If the operation breaks down at the end of 1979, we shall have lost up to £100 million—£72½ million trading losses and such part of the £27 million capital development not guaranteed by Chrysler as we cannot recoup. In practice, our losses would be well below that figure, but Chrysler would lose at least £95½ million £32½ million trading losses, £28 million capital development, £35 million Alpine capital for development, plus trading losses beyond the limits. This is not a question of the Government putting in all the money and Chrysler taking no risks.

If those figures are compared with what would be the losses if we accepted the total closure to which right hon. and hon. Members are committed—they are committed to a full-scale closure of Linwood and the West Midlands—the loss to the country in the first year, in terms of unemployment benefit and tax loss, would he £100 million—[HON. MEMBERS: "No."] They are the clever business men, who would bankrupt the whole
1525
country. Their policy shows how much they really are concerned about fighting for jobs.

I have sought to describe the worst losses that the country could suffer if the plan were to fail. I say that those losses would be more than covered by the figures that would be paid out in unemployment benefit. We deny that the plan is doomed to failure—[HON. MEMBERS: "Ask Chrysler."] I suppose that the Opposition think that Chrysler is running the risk of losing over £90 million for nothing. Perhaps the Chrysler company knows more about business than does the Opposition Front Bench, but that is no great compliment.

Although there are so many defeatists on the Conservative Benches and throughout the country, I am glad to say that a few patriotic comments have crept into the Daily Telegraph, even on this subject. If Conservative Members read Mr. Kenneth Fleet—[HON. MEMBERS: "What about The Times?"] We gave up The Times years ago. Anyone who expects much support for this country from The Times should have abandoned the idea long ago. No wonder the Conservatives get it all wrong, if they take their policy from The Times. Let them read Mr. Kenneth Fleet in the Daily Telegraph instead. Let them read how the capitalist system is supposed to work—[Interruption.]

Mr. Fleet is the eminent City correspondent of the Daily Telegraph. Until this moment he has been freely quoted by Conservative spokesmen in the House. Now that he supports the idea of saving jobs instead of killing them the Conservatives disown him.

We are prepared to debate employment at any time. The Government propose to use every weapon that they can to fight against the menace of unemployment, but it would not have been any good making that assertion and at the same time telling the House and the country that we were conniving to kill over 50,000 jobs.

Let no one be under any misapprehension about what is to take place when we vote. We shall be voting to save 40,000 jobs in Scotland and the West Midlands, and the Opposition will be voting to kill them off.